How To Create, Manage and Preserve Wealth

The Rule of 72 is neither magic nor myth, yet so many of us either do not know it or use it to create wealth and  achieve financial freedom.

I must admit that I, myself did always pay as much attention to the effectiveness of this rule as I should.

However, now I do and I can tell you this, it works!

I am passionate that everyone, starting with school children, should learn and apply this rule in their efforts to achieve greater and earlier financial independence and security.

 

Basically the rule of 72 is a simplified calculation to determine how long an investment will take to double, given a fixed annual rate of interest.

 

Here is an example:

Rule of 72

The Rule of 72 — really just a “rule of thumb” — is a great way to estimate how your investment will grow over time. If you know your investment’s expected rate of return, the Rule of 72 can tell you approximately how long it will take for your investment to double in value. Simply divide the number 72 by your investment’s expected rate of return (ignoring the percent sign). Assuming an expected rate of return of 9 percent, your investment will double in value about every 8 years (72 divided by 9 equals 8). 

Knowing how quickly your investment will double in value can help you determine a “ballpark” estimate of your investment’s future value over a long period of time. Let’s say that you invest $10,000 in a retirement plan. What will your investment be worth after 40 years, if you don’t make any additional contributions? Assuming an expected rate of return of 9 percent, the total approximate value of your investment would double to $20,000 in 8 years, $40,000 in 16 years, and $80,000 in 24 years, $160,000 in 32 years, and $320,000 in 40 years.

Please read the rest of this very informative article Here!