The Rule of 72 – What Is It?

Developed by Albert Einstein, the rule of 72 explains compound interest. It can help determine how many years it would take to double a persons initial savings or investments. If you take the interest rate you are getting and divide that into 72, that is approximately how long it will take in years for your money to double. Like the slight edge, Compounding interest can either work for you or against you.

For example,

At age 29, If we invested $5000 at 4%, your money would double every 18 years (72/4 = 18). That would mean by age 65 we would have $20,000.
If we look at debt of $5000 at 10%, that money would double every 7 years. By age 65 that debt will have accumulated to $320,000…

Does it make sense why you need to take action today and do what you can to get your investments moving to the right, and your debt to the left?

Of course it makes sense… But tailoring a financial plan for an individual or family takes time. It doesn’t take heeps of time, but in todays quota driven businesses it takes more then the 5 minutes most advisors are able to to allocate to the everyday Canadian.

The reason I point this out is that if “your guy” has a quota to meet, theres a good chance your financial plan won’t come out to your expectations.
Protect yourself from a financial plan quickly being thrown together garnering low growth and no debt solutions.

How many years do you have left for your money to double?

My door is always open to those wanting to learn a little bit more about money and finance.

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