Rule of 72

The Rule of 72 gives you Financial Freedom

Albert Einstein said: “The most powerful force in the universe is compound interest.”-  


This is why:

Let’s say you have $2,000.  No more and no less. If you take that $2,000 and invest it, what do you think it will become if you leave it alone for 48 years (meaning no withdrawals for emergency parties and no deposits from winning the lottery)?

Let’s take a gander at this chart and find out:

The Rule of 72 and The AWESOME power of compound interest

Number of Years	3%	6%	12%
0	$2,000	$2,000	$2,000
6			$4,000
12		$4,000	$8,000
18			$16,000
24	$4,000	$8,000	$32,000
30			$64,000
36		$16,000	$128,000
42			$256,000
48	$8,000	$32,000	$512,000

That’s Correctamundo!! In 48 years, your $2,000 will only be  $8,000 @ 3% (What’s your CD or Bond rate?), It will become $32,000 @ 6% (a conservative investment rate), and a whopping $512,000 @ 12% (this is the average investment rate).

Which one do you prefer?  Cool …right? Al is a smart fella are you?

Get & keep the lifestyle you deserve!

iMany  folks never learned this in college or even graduate school. 

How does it work? Take the interest rate/year and divide it into 72.  This gives you the amount in years that it takes for an investment to double in value. You can also use it to find the interest rate if you know how long it takes your money to double.

For example: 

• At 10%/yr an investment will double in 7.2 years (72/10 = 7.2).
• If your money doubled in 36 years, the interest rate is 2%/yr (72/36 = 2). 
• It works with inflation too.  At 3% inflation/year the average cost of goods will double in 24 years (72/3 = 24).  Bet you never considered that one!! 

Now, you can decide for yourself how important compound interest is and how to use it for your Financial Freedom.
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