Whether you’re a trivia buff or a financial geek (or both), here are 10 facts about finances to share with your friends … and accountant. Their reaction? Priceless.
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1. Did you know that Wall Street is really named after a wall? It was a wooden barrier built in 1653 to protect the Dutch colonists who then ruled Manhattan from the British and Native Americans.
2. When planning for retirement, really plan for it: In addition to what you’ll need to live comfortably, factor in likely price and cost-of-living increases and those unexpected or splurge expenses that surely will come.
3. There are six federal tax brackets. 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent. But it’s a common misconception that all of your income is taxed at one of those rates, depending on how much you make. If you’ve got, say, $30,000 of taxable income and are filing as an individual, you’ll pay 10 percent on the first $8,700, then 15 percent on the rest (that’s the rate for income between $8,700 and $35,350). Even people who are in the top 35 percent bracket (making $388,350 or more) pay only the 10 percent rate on the first $8,700 of their income.
4. The Dow Jones industrial average is named after real people.
Charles Henry Dow and Edward Jones met while they both worked for newspapers in Providence, R.I. Dow left to take a job as a reporter at a financial news bureau on Wall Street, and the bureau hired Jones on Dow’s recommendation. In November 1882, they started their own financial reporting firm (Dow, Jones & Co.) in the basement of a candy store, publishing a two-page summary of the day's financial news called the “Customers' Afternoon Letter.”
5. A credit report is a record of your credit activities, listing your credit card and loans, balances and bill payment history. It also shows if any action was taken against you because of unpaid bills. A good report means a higher credit score, which often results in lower interest rates.
6. If your credit card is used to make fraudulent charges, you’re responsible for no more than $50 in liability, period. But timing matters if your debit card is lost or stolen, so notify your bank ASAP. The longer you wait, the higher your potential liability.
7. When it comes to your credit cards, the best thing you can do is pay your bill on time and in full every month — the money that your plastic provider puts upfront for charges will be interest-free. Don’t fret; your credit card company still makes money in “swipe” fees from merchants accepting your card.
8. The word “tax” is derived from the Latin word “taxo,” which itself evolved into another word: “taxa,” meaning “charge.” Taxa, meanwhile, is also the root of the word “taxicab,” which derived from “taximeter cabs,” fare-charging vehicles that were introduced in London in 1907.
9. Sure, we’ve all heard the quote, “In this world nothing can be said to be certain, except death and taxes.” But Benjamin Franklin offered this wisdom in a larger context. The complete sentence that Franklin wrote in a November 1789 letter to buddy Jean-Baptiste LeRoy, a French scientist who studied static electricity, goes as follows: “Our new Constitution is now established and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”
10. If you’re offered $100,000 cash up front or a penny that’s doubled every day for a 31-day month, go with Abe Lincoln. Start with a penny and double its sum every day and you’ll accrue a lump sum of $10,737,418.23 at the end of a 31-day month. Now that’s compounding interest!
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Sid Kirchheimer is the author of Scam-Proof Your Life, published by AARP Books/Sterling.