May 20, 2018. By Alex Colosivschi
To further aid our customers in estimating the benefits of joint car subscriptions we have built a simple indicative financial calculator.
The calculator is built to demonstrate the power of “compound interest” when applied to potential savings from sharing a vehicle with 2 or 3 other subscribers.
After all car is the second largest expense item of American families after housing.
What is “compound interest”? Imagine you saved $350 a month by sharing a car with another subscriber. Annualized savings would be $4,200 ($350x12 months).
If invested in S&P 500 stock market index, and assuming the US stock market maintains an approximate 10% growth per year (average growth between 1997 – 2017), $4,200 saved and invested in Year 1 could be worth over $23,000 in 18 years, if all profits and dividends are reinvested. Just in time for college tuition payments if you have a newborn.
Once you start considering that you can achieve such savings and returns for every year of car use, numbers “really” start adding up.
Here is how the numbers add up:
Here are the inputs used to calculate the value of shared car subscription savings:
Basically what we have done here is assumed that every year the savings from joint car subscriptions will be invested in S&P500 index for a period of 18 years with dividends being reinvested.
You may ask but how is this possible? How can $4,200 or $5,600 in annual savings possibly become worth hundreds of thousands of dollars in 18 years? How?
There is a reason Warren Buffet attributes his financial success to the power of “compound interest” and Albert Einstein called the compound interest the eighth wonder of the world.
If you have any further questions about Currux please consult our FAQ section (https://currux.com/faq) or feel free to reach out to us using the LiveChat, our email (firstname.lastname@example.org) or phone number (713-574-2240).
Our head office is based in Houston.