Kreg, Compound, 529

Kreg Jig

I recently got one of these and it is remarkably efficient and effective. Kreg Joinery is an incredibly fast, strong, and simple way of joining wood. It essentially involves drilling a hole at an angle into one workpiece, and then joining it to a second workpiece with self-tapping screws. While it may seem simple, the technique is revolutionary because when you’re done assembling, there’s no need to leave your joint clamped up for hours, glue is completely optional, and – since you’re only machining one workpiece – there are no frustrating alignment problems to deal with. Kreg Joints™ are so simple they can be built in just a few easy steps!

Power of Compound Interest

I think everyone knows the power of compound interest but sometimes it is helpful to revisit it.  The numbers are staggering and a good reminder to save early and save often.

The following excerpt is from this article:

We have three investors who take different approaches to retirement saving:

  • Our first investor starts saving $300 per month at the age of 25
  • The second waits ten years, and starts saving $300 per month at 35
  • The third investor waits even longer and starts saving at 40, but puts $600 in each month

If we assume a respectable but reasonably conservative annual rate of return of 5%, here’s what happens to our three investors’ accounts:

compound interest

Let’s look at the results:

  • The 25 year-old invests $144k and grows it to $460k
  • The 35 year-old invests $108k and grows it to $251k
  • The 40 year-old invests $180k and grows it to $359k!

 

529 College Savings Plan (guest recommendation from G.C.)

Although this can be a heavily debated and very personal topic, many people find benefits in 529 college plans for funding higher education needs.  In Minnesota, there is not a tax deduction for contributions, but the earnings grow tax free and can be applied to any education cost (room, board, books, equipment, etc.).   Many would advise fully funding retirement prior to any 529 plan (you can borrow for college but not for retirement after all). Check out more details here.