Don't Spend!

Don't Spend! is a finance application that allows you to see the effects of investing your money.

The app should be very simple to use. You put in the amount of money you would spend, pick what you would invest in, and click "calculate" to see how much money you could theoretically have in 4 time frames - 5 years, 10 years, 20 years, and 30 years.

Short Term is classified as 3 month T. Bills, and Long Term is 10 year T. Bond.

return data is gathered from this website: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

inflation rate is gathered from this website: http://www.tradingeconomics.com/united-states/inflation-cpi

"Time value of money" is a basic concept in finance. The idea is that a dollar today is worth more than a dollar tomorrow because you can invest it. If you invest $100 in a 1% APR interest account, after a year, you will have $101.

Another basic concept is the "risk-return tradeoff". The idea is that a higher risk investment must compensate by offering a higher return. For example, the S&P500 offers the highest average return, but there is also a larger risk associated with the stock market. Short term t bills offer the smallest return, but they also carry the smallest risk. So the average return you should expect with the S&P500 is higher, but the variance is greater. For example, three returns of (14, 5, -1) give you an expected return of 6, but there is a chance you could get a return of -1. Three returns of (5, 5, 5) give you an expected return of 5, but you will be guaranteed to get 5.

Then there is the concept of "compound interest". This idea is that compound interest can lead to large gains over long periods of time. For example, if you invest $100 in a 1% APR account, in one year you will have $101. In another year, you will have 1% of $101, or $102.01. It is only an extra cent above a dollar, but you can see year after year, you start to earn interest on the interest you've already earned.

One final thing - the real dollar value return of your investment takes inflation into account. If inflation increases, then your dollar is worth less. The nominal dollar value return of your investment is return in today's dollars in the future. It does not take inflation into account, and therefore is usually a less accurate (or more misleading) way of measuring future wealth.

If there's any other ideas or concepts you want me to expand on or include in the application, please let me know! My email address: fxiaoding@gmail.com