Canadian Personal Finance Blog

Archive for July 19th, 2005

Einstein Finance

No, it is not E=MC^2, look at the mess that one has gotten us into.
I have read a bunch of places that Einstein was the first to quote the rule of 72. What is the rule of 72? OK, this one is really important for compound interest or growth, so pay particular attention to this one. If you have an investment M it and it is growing at a rate of G (compounded yearly) if you divide G into 72, that is how long it will take M to DOUBLE in value, hence Einstein Finance

Some examples:

• I buy a bond at 4% interest yearly growth (compounded), it will take 18 years for this bond to DOUBLE in value (i.e. 72 / 4 = 18 )
• I buy a bond at 2% interest and it will take 36 years for this to double in value.
• I leave my money in my bank account that pays 1% interest, it will take 72 years for it to double in value!

I don’t think I completely buy that Einstein thought this up, given that I have a math degree and this is just straight math, but let’s just say Einstein did say this, for now.

Find things that grow annually by 10% and your money will double every 7 years, which is really a good thing! Einstein Finance, a new concept!

OK, so in our home we have an Epson C84 Inkjet printer (two years old). We have been having problems with it and finally it just stopped printing, but not until after I had shelled out over $90 for new ink cartridges!

How much does a replacement of comparable value cost? $135 + tax – rebate . So this is another one that you have to scratch your head and try to figure out which is better, to spend $90 on ink cartridges or $135 on a NEW printer (which comes with cartridges)? I have spent far too long trying to “de-gum” this system, but I am very upset with myself for blowing that money without figuring this one out first MYSELF!

Repair? Um, unless you are under warranty with Epson, FORGET IT! Repair costs over $100 and remember how much the replacement system cost? $135, right…

Keep this in mind when you are thinking of purchasing a printer, or buying new ink cartridges. I have also been religiously buying EPSON brand ink cartridges, as I was told they won’t case the heads to “clog” (for two years evidently).

Grumble, growl, bitch, complain, swear…..

Caveat EMPTOR! –C8j