You don’t need a special ‘Rule of 72’ calculator to figure out this equation-it’s easy. Getting a sense of how compound interest can potentially grow your investment portfolio should be enough to light a fire under you and initiate your desire to start saving as early as possible, even if you only have a small amount. The Rule of 72 paints a picture of how quickly your money can grow without any additional investment on your part. It’s a powerful cycle that can lead to incredible growth. This produces more earnings, which can then be reinvested as well. How? Well, as you earn interest on your initial investment, those earnings are added to the initial amount while earning interest. What is Compound Interest?Ĭompound interest is what makes you wealthy over time the longer time your money is invested, the more it grows. When you see how quickly your money can double, you’ll understand the power of compound interest. It’s a shortcut that you, as an investor, can use to estimate if an investment will double your money quickly enough to be worth pursuing. ![]() ![]() The Rule of 72 is a simple equation to help you determine how long an investment will take to double, given a fixed interest rate. ![]() It’s simple to learn and easy to use so it’s a great tool for all Rule #1 investors to have in their back pocket. I use the Rule of 72 all of the time, and chances are, if you’ve listened to InvestED or read either of my books, you’ve seen how I use it.
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