one hundred dollars what does it mean to you what is it worth to you and the
bigger question is what could it be worth to you that's what we're talking
about in today's video as we look at compounding interest examples using $100!
it's coming up right now hey guys welcome back to money and life TV as you
guys know my name is Mike the CPA and you all know my sidekick chipper the
cockatiel how's your day going it is so good once again to see all of your
smiling faces I hope no matter where you're at or what you're doing that
you're having a great day I just really want to say thank you to all of you guys
who have been watching my videos and supporting this channel it means so much
to me to be able to be able to make these videos and interact with you guys
over YouTube so all of you guys make this experience special so thank you so
much you guys are just an awesome audience and community and this channel
seems to be growing much faster than I ever expected okay guys I think we're
gonna have some fun with this topic at least I know I am so we're talking about
$100 today and I have a special treat for all of you in the description
section below this video I've included a free downloadable spreadsheet that is an
annual compounding interest excel spreadsheet that you can download
completely free I made it myself but feel free to use it and download it
after you've watched this video you guys know how much I love to design and
giveaway spreadsheets on this channel I mean I have a mug that says I love
spreadsheets before I dive into that spreadsheet I just want to take a moment
to talk to you guys about what $100 means to me and how my decision-making
around the money has changed my life and the way I save money and the way I
invest money I remember growing up now I grew up I was born in 85
and so I really grew up in the 90s and I just remember I don't know if you guys
can like think back to when you were growing up of what a hundred dollars
meant to you but I just remember like being really into video games at that
point in my life I was always into electronics and things like that and so
when I saw a hundred like I'm like man to me that meant like new games and you
know I grew up in the era when you know like the n64 was really popular and so I
had you know was buying games with with that money like you know mark the
original Mario for Mario n64 in Goldeneye and even in Super Nintendo
just being able to buy those new games because even back then the games were
expensive I think Final Fantasy 3 at the time in America which is like Final
Fantasy 6 I think it was like a hundred bucks but just that hundred dollars
meant a lot to me back then because of what it represented what it could by
been now in what I want to talk to you guys though as I matured as AI I still
play some games but as I wanted to learn more about finances and more about
investing and things like that I really started to think about money differently
and it was in high school I took an economics course cuz you guys know you
probably had to take one too in high school and you're like what the heck is
this and then like years later it starts to make sense but when you're in high
school you're like I don't get this whole economics thing why do I have to
learn this well in economics there's a term that is known as opportunity cost
so I would the opportunity cost is basically based on decisions we make we
have a just a scarce amount of resources or a certain amount of resources at our
disposal and the decisions we make with those resources can make or break us
they can really alter the course of our lives every decision we make with money
can alter the course of our lives and so I thought $100 is kind of a fun example
because it's just an easy amount to think about the part of the way I think
about my wife and ice finances is $100 increments if I'm looking at my budget
and I have a very detailed budget I have spreadsheets for that too which I'll
link in the description section below but it's I really think about like okay
what can I do differently what can I do to either make a hundred dollars more a
month or save $100 more a month because it really adds up and I found that until
I saw it until I saw what a hundred dollars could add up to Oh on you know
when you compounding interest is applied to it I really didn't value it that much
so that's what I want you to be thinking about as as we go over this spreadsheet
right now is think about every hundred dollars more you can save every hundred
dollars more you can make an income how much quicker that can grow your wealth
and help your family and help your help you achieve your financial goals in your
life so I hope you guys will join me now on screen and we're gonna look at this
compounding interest spreadsheet I made for you guys very simple it's very basic
and it'll just take a second I'll show you the power of what a hundred dollars
could be worth to you for every $100 you're able to make more or save more
every single month let's check it out right now
okay guys this will only just take a second to show you but so what we're
looking at on screen is an annual compounding interest spreadsheet and
we're gonna look at an example using one hundred dollars like we were just
talking about earlier now what you're gonna notice is there
you're gonna put a hundred dollars in or we're gonna put a hundred dollars on the
into this calculation and we're gonna add no more beyond that and we're gonna
see what our hundred dollars can grow into over a period of time based on
various rates so in order to get this to work what we do is we come over here and
the only input that you really need to do in this spreadsheet is just drop in
the dollar amount you want to compound right here and it's gonna compound
annually for you so literally that's all you have to do
if you want to tweak the interest rate you can you can change these interest
rates feel free to it's not gonna hurt
anything but then the spreadsheet it's gonna do the rest of the work for you
and you don't have to worry about entering the number of years you wanted
to compound I've done all that for you over here in the left-hand column so it
starts right here and then it covers 40 years of compounding interest ok if you
want me to add another 10 years for 50 or or if you want to do it feel free to
do so but all we do is we're gonna come here
we're gonna drop in $100 and watch how the magic works at this spreadsheet boom
so now what we can do is we can start with if we had $100 that we invested and
it compounded at 1% and we wanted to know what that would compound to over 20
years at 1% annually we would just come down here go to 20 years which is right
here so if we have $100 compounding at 1% in 20 years it's gonna be worth one
hundred and twenty two dollars and two cents now what about eight percent are
sick you know yeah so now what about eight percent which is the long term
stock market average so if we invested in stocks at $100 and then we never look
back and we got eight percent per year for 40 years what we would do is we come
this column right here scroll all the way down line up your finger well in the
very last row here 40 years that money let me make sure yep that money at eight
percent one hundred dollars would grow to two thousand one hundred and seventy
two dollars after 40 years compounding at eight percent so if you think about
it that mathematically that money is now we take the two thousand one hundred
seventy two dollars divided by one hundred so for every hundred dollars
that we're able to save and we let it compound for a long period of time at
eight percent interest the money is 21 times more than what we initially
started with
and so that's kind of how I love compounding interest and I love seeing
examples like this because visually we can start to see a different value of
what our money whether it's $100 or any other figure can become when we think
about compounding interest and opportunity cost if we go blow this
money it never can become that and not that we're gonna stop all spending
basically we can't but if we can think about how we can make more of these or
save more of these and what if you can pound to overtime it could completely
change our life now you're probably saying Mike how we know is your
spreadsheets correct how do I know that your your calculations are accurate well
that's a great question you should definitely be asking that because I
asked the same question when I asked her I made it I'm like is this right I
needed something to test it against well my one of my favorite online calculators
is the TM the TV I'm saying on TV M calculator app it's a bunch of financial
calculators in it and I actually have this on my phone but we're on at the
website right now I'll link this up to it's got so many different free
calculators you can use in it's just wonderful I love this place and so right
now we're on the compounding interest calculator so so chipper give me an
example to test with the audience I'm all over it
so chipper wants to see an example of $250 compounded annually at 8% for 20
years okay so let's see what this calculator gets and then let's test it
against the spreadsheet I made for you guys so we're gonna put in $250 here and
we like said it's its annual compounding so we're gonna change this compounding
the annual put that in right there and we know that there's no further pot
deposits that's zero in 20 years so we know that 20 times 12 is 240 so that's
240 compounding periods in the compounds annually of course but interest rates 8%
and in this calculator gets that turns into one thousand one hundred sixty five
dollars twenty four cents after 20 years at 8% two hundred dollars at that rate
now let's test my spreadsheet that I've made against that so I'm gonna put in
$250 here boom $250 eight percent twenty years look at that guy's it is spot-on
1165 dollars in twenty four cents open the calculator one hundred one thousand
one or sixty-five dollars and twenty four cents so you guys can see that's
how the spreadsheet works so right like I said you can just change interest
rates if you want to calculate different interest rates you can change the
investment amount to whatever you want it to be you can make it like if you put
in like fifty thousand sometimes it's fun to see what if I invested fifty
thousand and never looked back well then you can conceive how fifty
thousand would compound to you over time and it can grow pretty easily to over a
million dollars so this is just a tool that you guys can use and that's all I
have for you for the spreadsheet I hope you guys find that helpful alright guys
I really hope you found that spreadsheet helpful feel free to download it for
yourself if you have any problems at all download me just let me know I'll be
happy to either update the link or I can I can send it to you over Google Docs or
another another format so that you can access it now the idea of a spreadsheet
that I have designed for you guys is really you know when I look at things
visually on on paper when I can see what something can become it really alters my
decision and helps me make better decisions and that's really the point of
the spread cheetahs is to motivate uses to help you
think differently of how you can save $100 more a month or how you can make
you know a hundred dollars more a month and just what that amount of money can
grow to whether it's a hundred dollars a thousand dollars or ten thousand dollars
of what it could potentially do for you in your situation that's what I hope you
guys take away from this video if you guys have any questions about the
spreadsheet at all just let me know but I would love to hear from you guys of
what does a hundred dollars mean to you especially as when you wonder you're
younger what did that hundred dogs represent what was the one thing when
you got that hundred dollar bill just for fun what would you want to go out
and buy that's what I'd love to know and it would be fun to hear guys responses
in the comment section down below alright guys thank you as always for
hanging out with me here again over YouTube it is always a blast seeing you
guys you know if you if you liked the video make sure you drop a like to help
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consider subscribing if you have not already it was great seeing you guys I
hope you have a great week and I will see you in the next video love you guys
peace