## 12c Things I Learned from my Calculator.

In a world of chats, posts, opinions and rhetoric it’s nice to have a trusted advisor who can perform without emotion or fear.   My advisor tells me what I need to hear not what I want to hear.   I get the facts and only the facts.   My trusted source is available 24/7.  What is this magical source of information?  It’s my Hewlett Packard 12c calculator.   The HP12c is a RPN juggernaut.  While I watch the news, my reliable partner keeps me grounded.  It helps me separate the wheat from the chaff.   My little HP12c has been with me through rising and falling markets, rate hikes and rate cuts.

Here are twelve things I’ve learned in my years crunching numbers on the 12c.

1. If I save \$1,000 per month for thirty years at 10%, I’ll have a nest egg worth \$2.26 million dollars! This calculation works regardless if the stock market is rising or falling.   The best opportunity to generate this return is to own stocks through good times and bad.
2. It tells me if I procrastinate I’ll have less money. If I save \$1,000 per month for 15 years at 10%, I’ll end up with \$414,000 a difference of \$1.84 million!
3. It helps me factor inflation into my original calculation. A 3% inflation rate will reduce my \$2.6 million to \$1.1 million.
4. It tells me if I invest in long term government bonds, I’ll end up with less money than if I invest in stocks. The long term historical returns for bonds has been 5.6%.  A monthly investment of \$1,000 for thirty years will be worth \$930,000 after thirty years.
5. When I add a 3% inflation rate to my historical bond return, the value drops to \$537,000 after thirty years.
6. It helps me calculate the percentage gain or loss on bonds I buy. A thirty-year bond paying 3%, will gain 22% if interest rates drop by 1%.  If interest rates rise by 1%, my bond will lose 17%.
7. It tells me if I want to reduce my exposure to bond losses, I should buy a five-year bond. A five-year bond will lose 4.5% if interest rates rise by 1%.  If I’m concerned about rising interest rates, I will need to shorten my bond maturity dates.  Of course, a five-year bond will also gain less if interest rates should fall.  A 1% rate drop on a five-year bond will generate a return of 4.7%.
8. It helps me keep my debts in check. My total monthly debt payments should be less than 38% of my gross income.  If I make \$10,000 per month, my total debt payments should be less than \$3,800 per month.
9. It helps me calculate a mortgage payment to see if I can qualify for the home of my dreams. A home purchase of \$500,000 with a 20% down payment and a 4% interest rate will give me a monthly mortgage payment of \$1,909.
10. It will calculate my mortgage payoff date as well. If I add an extra \$500 per month to my mortgage payment, my payoff date will be twenty years rather than the original thirty. I can shave ten years from my original mortgage term.  This ten-year reduction will save me over \$100,000 in interest.
11. The average new car purchase is \$33,560. A five-year loan at a rate of 4.3% will calculate a monthly payment of \$622!  Is \$622 worth the new car smell?
12. My calculator keeps my budget in line. I can calculate all my payments on my trusted device and it helps me make better financial decisions.

At the root of my calculations on my consistent 12c I know if I save money, investment for the long term and keep expenses low, good things will happen.

“A businessman is a hybrid of a dancer and a calculator.” ~ Paul Valery

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