I've heard something of an IRC or IRA or some sort of account that would essentially double the amount of money in the account every 7 years. Is this true? I don't know much about it if it is.
Great question, thank you. I don't know what an IRC is, but an IRA is an Individual Retirement Account. These are very common and can invested in many ways, but serve only 1 purpose. The government has a limit on how much you can put into an IRA each year, called a "contribution limit". This limit could vary a little depending on your age, and the year. The limits have been increase recently to $5,000 for 2008. http://www.irs.gov/retirement/participant/article/0,,id=188232,00.html
Let's talk about how to invest your IRA, shall we? We spoke of different types of accounts during week 2 of the Jr. Achievement classes that I taught you guys. One was a CD, or Certificate of Deposit. This is a very common way to invest your IRA. The reason a CD is a great tool for investing an IRA is because the money in an IRA is used specifically for retirement, which means you cannot touch it before a certain age (59 1/2), without facing penalties from the government. There is a whole lot more to add about this, but we won't go into them here, check out the link above for more info. Now, to answer the other part of your question. I suppose, if one invests enough money into an IRA, and is given a good rate of return, one could in fact double their money in 7 years. You do the math though. Let's say we have one years worth of contributions, $5,000. What would it take to get to $10,000 in 7 years? Remember the concept of compounding interest, too. In year one, if your rate is 5% and you start with $5,000, you will have $5,250 by the end of the year (theoretically). Then, in year 2, you have $5,250 (still dealing with rough estimates here), and your rate again is 5%, you will end THAT year with roughly $5,512.50. You will gain another $12.50 of interest, from your interest that you already earned...pretty sweet huh? So, post a reply, what rate of return would you need in order to double your $5,000 in 7 years?
Like the picture above? Stay in school, get a good education. Can you imagine having a job that requires you to make deliveries all over the world, but leaves it to you to determine the mode of transportation? Now imagine that you have no education...can you picture yourself riding this bike? I can!
