Money 101 aka Rule of 72

As this blog is called Paradox Living I am going to write about many different topics, sometimes with seemingly opposing views.  Although it's been a while since I blessed the keyboard with my Midas Touch, I have decided to make my glorious return... Think Mark Morrison "Return of the Mack," you're welcome!
So if I am truly blessing my readers with a golden touch, I figured why not teach you about how gold works aka money.  I am going to give you all a free lesson in compound interest (seriously it's more interesting than it sounds).  This is called The Rule of 72.  This incredibly prevalent and powerful rule is actually very simple to understand and can change your funds and lack of fun.  This is based on compound interest and rules of exponents.  The rule states that you take whatever the interest rate is and you divide it by 72. and the quotient will be a fairly accurate amount of years or cycles it takes for your money to double.  Now I know reading about math is not the same as learning it.  So I will try my best to create a visual example here that is preceded by a story explaining where the numbers come from:

You, Cousin A, Cousin B, and I all have a common uncle who has recently passed away.  When he passed away he left each of us a respective $5,000.  Now You are a very financially conservative person and decide to put your money in a savings account that earns 1.0% interest (better than the average savings rate right now).  This means that your $5k will be $10k in... 72 years (interest rate divided by 72).  However, Cousin A has some connections to a bank and figures out a way to get 3% interest on his savings account so he decides to invest it.  Person A's money doubles every 24 years (rule of 72), so Cousin A ends up with $20k in 48 years when he's ready to retire.  Cousin B says you guys are crazy for putting your retirement money in a savings account and decides to lock his up in a C.D. or money market account which is earning him a 6% interest rate.  Cousin B's money will double every 12 years and he will end up with $80k in 48 years when he is ready to retire, better but certainly not capable of supporting a person or family at retirement.  I have the knowledge that you did not.  I know that over the last 75 years the S+P 500 (stock market) has averaged about 12% interest on money invested, and yes this includes many wars recessions and even the Great Depression.  So I decide to invest my $5k into an ETF that covers the whole S+P 500.  I will end up with
$880,000...  Now that's a Midas Touch.


Because I know this might not make sense reading it I tried to put a visual graph that showed the progression.  I highly suggest looking at it then going back and reading it.

This will hopefully make the rule more clear.  

The Rule of 72

The rule states that you take 72 over the interest rate (n) and that is how long it takes till your money doubles. This rule is a rule of compound interest and can be used against you or for you.  It is against you when you’re paying credit cards and mortgages.  It is for you when you are investing, and putting money in C.D.’s.

72/n = time period for money to double

72/1 = 72 yrs                     72/3= 24 yrs                   72/6= 12 yrs             72/12= 6 yrs

You, 1% ROI[1]   Cuz A, 3% ROI,  Cuz B, 6% ROI,     Me, 12% ROI

$5k                                          $5k                              $5k                                $5k

6 yrs:     N/A                           N/A                             N/A                                $10k

12 yrs:   N/A                           N/A                             $10K                             $20k

18 yrs:   N/A                           N/A                             N/A                              $40K

24 yrs:   N/A                           $10k                            $20k                             $80k

30 yrs:   N/A                           N/A                             N/A                              $160k

36 yrs:   N/A                           N/A                             $40k                             $220k

42 yrs:   N/A                           N/A                             N/A                              $440k

48 yrs:   N/A                           $20k                            $80k                             $880k

Now that should be retirement for me while you guys are going to have to start looking for other jobs.

To clear up any confusion, this is why banks give you an interest rate.  When your money is locked with them they play the market with it and gladly give you a few % ROI, when they can generate that 12% or greater ROI.

---

[1] Return on Investment

If anybody has any questions please let me know.

LJ

A Tale of Two Cities

When travelling through Istanbul there is a constant dichotomy that is present at every corner. The Byzantine era and influence of the West peek through under the shroud of the East and Islamic culture. There is no greater example of this than in the tourist hotspot of Tacsim. Tacsim is a Fifth-Avenue transported right into the heart of Istanbul and Turkey. After travelling through the hustle and bustle that is Istanbul mass transit we arrived at a square with a statue of Attaturk and his followers. If you spend any time in Istanbul the face that you will quickly become accustomed to is that of Attaturk. He is literally in every restaurant and public location. As you travel through the square and the many vendors you almost unknowingly find yourself on a street that you would place in New York City before Istanbul. There are traditional vendors in the forefront of shops but looming behind them are Starbucks, Pizza Hut, and many other Western staples. As you walk through this area you hear American pop culture music and see many people doing their best to act Western. This area more than any other truly illustrates the effect the West has had on Istanbul and Turkey as a whole.

Also located within this area is the great nightlife that has made Istanbul so famous. There are clubs, bars, cafés, and other social meeting places that give Istanbul its unique cosmopolitan flavor. It is here in Tacsim that Luke and I really took our first plunge into the club scene of Istanbul and went out of our way to meet the locals of Turkey. Many people may hear Turkey, the Middle East, or even Istanbul and be immediately transported to images of a violent and unfriendly place. This place that many think of is not the Turkey that we discovered. As we visited many of the different nightclubs and taverns we met many local Turks who were more than willing to buy us drinks and talk about the history of their country and tell us their individual stories. Our first nightclub was a place called Araf. It was here that we experienced the mix of house-club music that is found in all of the trendy areas of Istanbul. There was a local band that we spoke with that had a few members from Texas and other parts of the States who were willing to tell us the highlights of their stay in Istanbul.

One of the peculiar things about the nightlife in Istanbul is the location. There are many clubs and dancing areas that are positioned within ordinary looking buildings and they have little to no advertising. Imagine walking into a dorm hall or apartment building and blindly walking up eight floors. Once reaching the eighth floor you are greeted by the traditional bass thumping of a club and just an ordinary looking door that has a poorly written sign that says "Club". We awkwardly opened the door and climbed the stairs that followed to find a full dance hall with a bar and band. Finding places such as this illustrates again the hidden nature of Istanbul. Much of the city and the country as a whole is on a "need to know basis" and the really good places are spread by word of mouth. Fortunately for us we were able to find good guides through other young people or friends we have meet throughout our daily travels. When visiting these clubs and after a night of dancing you find yourself falling into a familiarity with those around you and your location that you really forget that you are in another country, let alone in the East. Istanbul is truly an example of two worlds struggling to co-exist.

~SB

From out of the Blue

As we mentioned in our earlier posts many of our visits were to mosques and other pillars of Islamic culture. As I entered my first few mosques I found myself overwhelmed with a flurry of emotion. As many of us in the West have done I have unconsciously allowed my first opinions of those in the Middle East to come from CNN and textbooks. There is not a problem with that but as I first walked through the halls of the Blue Mosque I felt a growing tension within. I came to the realization and understanding that what I had originally perceived to be a very inward and backward culture was not what it had seemed.

The Blue Mosque is a huge architectural masterpiece that stands in beautiful magnificence adjacent to the Ayia Sophia. When looking at it from the outside you are first drawn to the huge dome and minarets that are stereotypical of Islamic architecture. When viewing these characteristics my mind was originally drawn to preconceived notions of what I would find inside. There were thoughts of repression and silence and an area of prayer that I would have to be concerned with my every move and sound. I was completely, at the very core of me, mistaken. Walking throughout the Blue Mosque I was shocked at the beauty and color located within. The walls were covered with beautiful tiles illustrating the amazing craftsmanship that was needed to create a building of this scale. There were people praying but also people socializing, making the Blue Mosque a genuine community center. I was surrounded by people from the West and East each marvelling at the sheer visual majesty of the mosque while others silently went about their prayers. There were practitioners of the mosque that were eager to answer any questions I had about Islam and to make me feel comfortable in enjoying my stay. I was amazed at the expression and color that was located within the mosque and associated with Islamic faith. In many circles the religion is portrayed in such a negative light with so much focus on how expression is repressed and not encouraged. In this meeting place the exact opposite was present as many people of all backgrounds and beliefs came together. The things I saw and people I met truly came from out of the Blue.

~SB

Who really turned Medusa into stone?

Today we rose early.  As we navigated through the bustling streets, and if you think we have to many traffic laws you then haven't been to a country where there is none, Dr. Glidden gave us a run down on the history of Ayasofya.  Ayasofya was built in the 6th century, which makes it more than a half century older than Notre Dame!! This magnificent architectural feat was done under Justinian.  Justinian wanted to be remembered for his greatness.  Obviously this was flawless logic because big impressive buildings = greatness. It's science.  This Church/Mosque/Museum was incredible.  The Ayasofya was originally an Eastern Orthodox church but when the Ottoman empire took over in 1453 it became a mosque.  When Attaturk came to power he turned this to a museum.  In a mosque there not supposed to be relics, which churches are full of.  Fortunately for all of us history geeks, the Ottoman's were respectful of previous cultures and did not destory the church or relics.  They simply covered them up, and now you can see the dirt outlines from where these massive crosses hung. I suggest checking out this link for brief overview of Ayasofya's history click here.

After the Ayasofya our daring group of explorers trekked underground into another of Justinian's gifts to history - The Basilica Cistern.  The Basilica Cistern was an underground water dome and is 70m. in width and 140m. in length.   This dome is supported by 336 marble columns.  This underground marvel was restored in 1987 by Istanbul's municipalites.  Istanbul's municipalities must have been scared stiff (pun intended) or either incredibly ignorant because they forgot to inform the public that Medusa was down there.  As our group innocently traversed the underground pathways we ran into this monster.  Predictably, I channeled my inner Perseus and turned Medusa monster into stone... you're welcome world!

(sorry for the lack of pictures, I am on a computer in Greece and was not able to upload any right now... but stay tuned)

And I promise to my loyal followers, all 3 of you, to start writting more often.

Cruise down the Bosphorous

When entering Istanbul there are so many emotions and thoughts that run through one's mind. There is the sweet smell of the Bosphorous that seems to blend into the scent from street vendors and the city. Your senses are bombarded with smells of foreign foods and the sounds of this bustling metropolis.

As the group and I made our way through the city we could immediately feel that we were tourists. The first aspect of this great city that struck us was the amazing architecture. Unless you reside in one of the larger cities in the United States there are not many awe inspiring monuments that simply astound you. As we made our way from the hotel towards the mass transit system we passed the Ayia Sophia. Without warning it appeared on our left as we approached the heart of the city and the mosque looms over the area. The rich culture and history of this city had already asserted itself and we had only gone a few short blocks. It is only after seeing a monument such as this that you experience the void of culture and history that is felt in many of our smaller cities back in the United States.

We proceeded towards the rail system like walking sponges. Each sight, sound, and foreign word we soaked up constantly wondering what taste, or meaning each held. On the transit system we purchased our tokens and headed towards the river. We passed through a small system of shops that were located in between the river and the rail system. One of the things that was shocking was the sheer magnitude of people in such a crowed area. There was the same hustle-and-bustle like that of a morning in NYC. The shops were similar with street vendors pleading to us as we passed by that we were "Long lost friends. I have the best deal for you in town!"

We finally reached the Bosphorous and boarded a large ferryboat. The ferry seated around 50-75 people but did not feel crowded. We staked out our seats on the boat and prepared to take in the long-awaited weather and water. The water is some of the most beautiful in the world. It has a bright, vibrant, tourqeouis coloring to it and is rich in marine life. The ferry ride was quite peaceful and we took the time to enjoy the scenery and ask questions. Watching the coastline we could see how Istanbul appears to be many cities built on top of one another. There is new architecture and clubs pushing down on old buildings and districts with each appearing to fight for dominance over the other. There are old buildings with graffiti located directly next to new vistas. Istanbul holds all of the traits of an old, historic city and we knew that this was only the tip of the iceberg.

~SB

Into the Mystic and Out the Hookah

After the Cruise Down the Bosphorus (see SB's previous post) it was time to experience the local cuisine.  Most notable, unfortunately, was the fermentted carrot juice. Despite this godforsaken drink there were still brightspots to the meal.  Such as the Ilskander and the Kofte (both local favorites).  As we let our stomachs digest our group strategized the next move.  There was a large clamor for a local hamam, which is apparently a heaven sent scrub down and massage.  The women and The Baby Faced Angel Brian Fisher went to the Hamam to treat themselves.  The men went to cheat themselves and abuse their lungs and wallets at the Hookah bar Star Cafe.

Comprised of 4 champions we predictably decided to turn everything and anything into a competition... as all testosterone driven species do.  There were many suggestions for the rulings of what would count towards our hypothetical crown.  Although several days later there are still no clear rules there has been  an important precedent:  any form of creative and witty insult to another member of our pack deserves a point; however you will be penalized if the taunting lacks creativity and humor.  With this being our Magna Carta we decided to govern ourselves and let loose on Istanbul.

As we strutted our stuff down the bustling streets of Istanbul we must have given off a "special" vibe because every single vendor told us they had a "special price" - JUST FOR US.  After being convinced to spend our Turkish Lira at Star Cafe we sat down for what would become that cafe's most epic 5 hr showing of persistence, endurance, and power.  The vendor Saladeesh (possibly misspelled) brought us out some Effes beers and an Apple and Mint hookah.  As we lounged on the couch our banter hit full effect.  With our ostentatious attempts at temporary dominance we caught the attention of many locals and tourists.  The crowds started to fill in this cafe and our hearty laughter only increased in decibels.  Saladeesh even stareted joining in our "tomfoolery," an unnamed contestant actually used that word and was naturally awarded 3 points.  We made friends with many of the other customers as well, as they joined the conversation at some of the more meaningful points. Such as when Fisher joined us. And I quote an adjacent couch "Did you just get back from a hamam? because you are glowing!"  Needless to say the jury was unsure on how to handle that interaction and Silky Smooth Fisher was both awarded and deducted a point at the same time.  The adjacent customer was entered into the competition as a write in and was awarded the maximum 10 points allowed for one move.

After a few hours Saladeesh brought us out more shisha (hookah tobacco) and even gave us his favorite mix for free - grape, wine, and vodka.  This epic display of iron will continued for a painful 5 hrs.  As we disembarked and literally hugged our new friends at Star Cafe they promised if we are to return they will pay for some of our purchases.  I would be remiss if I didn't name the introductory champion - TJ the Tiger.... 

(Seated from left to right: Dan aka Hippy, Luke the Duke, Scotty the Body, TJ aka Tiger)

After the competition was over we were left to navigate our way back to the hotel and marvel at how wonderful this city truly is. 

LJ

Paradox Living

This blog is the property of Luke Jeraci and Scott Ball.  We have deliberately chosen the title Paradox Living because of the complexities of life.  This can be observed throughout many, if not all historically documented lives.  It is rare that somebody only acts ethically or unethically, stays stagnant or lives like a nomad. 

Our lives have certainly been filled with many contradicting ideas and actions.  However, we still believe in the power of information, and the necessity of disseminating that information.  This blog will be based at documenting our current travels, and some of our more lucid thoughts.

Hope you enjoy, and feel free to comment and add suggestions!

LJ & SB