Math 101
PAGE 4
Percentage Changes
Percentage changes show you how much more or less something is worth this year than last year—how much money you've made in your 401(k), for example, or how much you've earned on your house. Often, when you deal with brokerage firms and read the stock pages, the percentage changes are computed for you. But knowing how to do it yourself can be helpful—and it's easy.
Figuring out a percentage change is a two-step process.
Map to a Million
Make a simple math move that's guaranteed to improve your financial situation.
Move $2,000 a year from a savings account earning 1.5 percent to a money market account earning 4 percent.
Move $2,000 a year from a savings account earning 1.5 percent to an index fund earning 8 percent.
Math 101 continues...
Percentage changes show you how much more or less something is worth this year than last year—how much money you've made in your 401(k), for example, or how much you've earned on your house. Often, when you deal with brokerage firms and read the stock pages, the percentage changes are computed for you. But knowing how to do it yourself can be helpful—and it's easy.
Figuring out a percentage change is a two-step process.
- Take today's value and subtract the prior value from it.
- Divide that answer by the prior value.
- First, subtract the prior value from today's value:
$300,000 – $220,000 = $80,000. - Then divide that answer by the prior value:
$80,000 / $220,000 = .363636.
You made slightly over 36 percent. In other words, you made a killing.
Map to a Million
Make a simple math move that's guaranteed to improve your financial situation.
Move $2,000 a year from a savings account earning 1.5 percent to a money market account earning 4 percent.
| 1.5% | 4% | EARNINGS DIFFERENCE | |
| 10 years | $23,738 | $27,076 | $3,338 |
| 20 years | $48,993 | $64,461 | $15,468 |
| 30 years | $78,332 | $120,196 | $41,864 |
Move $2,000 a year from a savings account earning 1.5 percent to an index fund earning 8 percent.
| 1.5% | 4% | EARNINGS DIFFERENCE | |
| 10 years | $23,738 | $33,828 | $10,090 |
| 20 years | $48,993 | $104,475 | $55,482 |
| 30 years | $78,332 | $261,288 | $182,956 |
Math 101 continues...
Reprinted from Make Money, Not Excuses by Jean Chatzky with permission from Crown Business, a division of Random House, Inc. Copyright © 2006 by Jean Chatzky.
Please note: This is general information and is not intended to be legal advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action. Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.
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