DIYbanter - View Single Post

Duesenberg

On 4/15/2012 5:47 PM, wrote:
On Sun, 15 Apr 2012 16:03:07 -0400, wrote:

The biggest factor that is under EASY control of home owners is always
going to be their air conditioning temperature setting, and that is also
going to be the last usage they are willing to sacrifice because it
involves their own comfort level (how hot and sticky are you willing to
be in your own home - if it means you'll save a measely $1 or $2 today,
and again tommorrow, and again the next day, etc).

Every day, that $1 or $2 bargain they make with themselves is worth it.
The fact that it might (or will) end up being $30 at the end of the
month is irrelavent. That's if they even know that setting the temp. to
77f vs 74f is going to cost them an extra $1.24 today.

$1 a day invested for 5 years at 7% compounded interest is $2 148.

$1 a day invested for 25 years a 7% compounded interest is $23 624.

Hopefully somebody will doublecheck my math.

Invest that dollar a day in a tax shelter of course to maximize returns.

Some people don't care about $365 a year in simple savings and others
do. Some people try to sacrifice and decide it's not worth it and others
stick with it.

Your point about the air conditioning is what we do at home. We like
our house cool at night and are willing to pay for it.
But WHERE do you get 7% today??? 0.7% is more realistic.

Good point: yes 7% is tought to find however:

Index funds and ETFs. Myself I only invest in index and dividend funds,
even bond indexs funds instead of bonds themselves. TD has a CDN bond
index fund that has average 6% a year for me and only .33% MER. Ishares
Canada has a couple that do 7%. Minimum purchase is $25 if on a
prepayment plan, otherwise $100.

You'd have a easier time getting 7%, if you just invest and forget for
20 years, in a broad market index. Now the 7% return per year factors in
over time, best to strive for it over 10 years.

Otherwise pick a basket of well known dividend paying stocks and just do
DRIPS. Get 4% yields and find the remaining 3% on share price
increases, however this is really tough to do with $1 a day.

But your point is not lost on me. Yes 7% compounded return is tough to
find these days. However if you pay that $1 per day against your
outstanding mortgage principal then you get savings. If you have 250
000 mortgage principal amortized over 25 year, interest was 2.9% and
paid an additional $7 a week from the first weekly payment you'd save
$610.00 in interest over the life of the mortgage.

Again. I hope my math is right.