Those who understand interest earn it, those who don’t, pay it! Are student loan rates really what they seem?

Einstein said: “Those who understand interest earn it, those who don’t, pay it.”

Which are you; the earner or the payer? Check out this student loan being charged 2.9%. This person told me they were not in a hurry to pay back this loan because the interest rate was so low. But the rate is only a bank’s reference #, it is not what they are actually earning off you. The volume of interest this person is paying is 12.172% of the total principal amount. Einstein had it right when he said the quote above. And people think nothing of this while they chase high rates of return on the volatile stock market. Where can you earn 12.172%, risk free? In your own private banking system. Isn’t not losing 12.172% but instead capturing that the same as earning it? Call me today to set up a time to learn more and stop throwing your money away unknowingly and unnecessarily.

By the way, looking at the end of year one, the cumulative interest paid is $302.61 and the cumulative principal paid is $1,239.75. So the banks earned 24.408% in year one. Hello!!! Anybody home???

This same person had $50,000 in a corner bank savings account earning less than 1% and $9,000 in a CD earning 13%. He wanted his money to be liquid, for easy access to it, but also wanted to take advantage of the higher interest rates but had to put some of  his money in jail, in a CD, to receive that. Also, after the CD term is up, what happens? The long term compounding of interest effect is interrupted or stopped actually. You have to start all over again, beginning a whole new term so never being able to take advantage of long term compounding which is where the big bucks dwell.

Your own private banking system can accomplish way more than this scenario. You can achieve lifelong compounding of your dollars while recapturing lost interest charges and more.

Click here to compare an IRC 529 plan with an IRC 7702 plan for college savings.

 

 

 

 

 

 

 

 

 

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June 18, 2012 · Jennifer · No Comments
Tags: , , , , , , , ,  · Posted in: 529 vs 7702, COLLEGE SAVINGS PLANS, Interest VOLUME, Student Loan Rates, STUDENT LOANS

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