The Rule Of 72: how it can help you achieve Financial Freedom
There’s this Formula created by Albert Einstein for calculating how long it will take to double your investment based on the interest earned each year.
He called this formula the rule of 72.
When applied to a yearly rate of return (ROR), or annual percentage yield, you can quickly determine how long it will take to double your money.
You are 30 years old and have P 100,000 in savings. You put it in an account that you expect to earn 12%. According to the Power of 72, it will take 6 years to double your money, so at age 36 you will have P 200,000 if you add nothing more to the account. At age 42 you will have P 400,000 and at age 54 have P 1,600,000 from a P 100,000 investment.
See table below:
|30 years old||P 100,000|
|36 years old||P 200,000|
|42 years old||P 400,000|
|48 years old||P 800,000|
|54 years old||P 1, 600, 000|
Your money is working for you. All you had to do is to leave it alone!
In the example above, it takes 6 years to double your money at a growth rate of 12%.
You see, investing your money early and wisely is a good idea. It’s never too early to begin investing!
The earlier, the better of course, but for anyone at any age, the time to start investing is now.
I believe that it really does not matter what age you are, whether you are 18 or 80, investing is a good thing. If not for you, then at least for your children and loved ones.
Every investor to take advantage of Compound Interest. The rule of 72 is not an exact formula, just a rule of thumb, but it’s pretty close at any rate of return.
What are you waiting for? Start Investing now!
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