How to Double Your Money Using The Rule of 72
Albert Einstein believed that the Rule of 72 was a more important discovery than his theory of relativity. The first reference of this rule comes from Luca Pacioli who is regarded as the “Father of Accounting”. In his 1494 book Summary of Arithmetic, Geometry, Proportions and Proportionality (Summa de Arithmetic, Geometria, Proportiono et Proportionalita) he explains the importance of this rule. Watch the whole video to find out more. Enjoy! Awesome Goodies 👇 ▶ 📚 FREE Audiobook from Audible: https://amzn.to/3d2dVBd Please note that the above links are affiliate links. #Rule #72 ⏱ Time Stamp: 00:00 Introduction 00:52 The Rule of 72 02:20 Compound interest 03:29 Investments 04:43 Inflation rate 05:41 Savings 🚀 POPULAR VIDEOS: 📺 ▶ 10 Legit Ways To Make Money And Passive Income Online - https://www.youtube.com/watch?v=EAj0ZsYcHkQ&t=0s ▶ 10 Money Goals You Must Achieve Before You Retire – https://youtu.be/Nz61g5KoX4E ▶ 10 Assets Everyone Should Invest In (In their 20s & 30s) - https://www.youtube.com/watch?v=HOlEwnkKSso&t=0s 📚 References: https://bit.ly/3Mgpo1b 🌎 Practical Wisdom – Interesting Ideas On this channel, I talk about money, lifestyle, investing, how to make money online, e-commerce and so much more. So, make sure to subscribe if this interest you! DISCLAIMER: I’m not a financial adviser. These videos are for educational purposes only. No official financial advice is being given. Please always check with a professional before making any investments or financial decisions. Your investments are your sole responsibility, these videos merely share my own opinions with no guarantee of gain or losses. The Audible, Seeking Alpha, Skillshare, Vint, and Depositphotos links are affiliate links meaning if you make a purchase using the link, I will receive a small commission at no extra charge to the buyer.
How to Double Your Money Using The Rule of 72
Albert Einstein and the Rule of 72
Albert Einstein believed the Rule of 72 was more significant than his theory of relativity. Luca Pacioli, known as the "Father of Accounting," first mentioned this rule in his 1494 book.
The Rule of 72
- The rule helps in setting financial objectives, analyzing economic trends, planning for goals, evaluating investments, and managing debt.
- Calculation: Divide 72 by the expected rate of return to determine how long it takes for an investment to double.
- Advantages include quick trend assessment and financial decision validation but have limitations with accuracy below 6% and above 10%.
Compound Interest
- Works only with compound interest; understanding it leads to financial growth through continuous reinvestment.
- Longer investments yield greater earnings due to interest compounding on initial investments.
Compound Interest and Investments
Compound interest plays a crucial role in financial growth, especially when considering investments.
Compound Interest Continued
- Higher interest rates lead to quicker doubling of money; consult a financial advisor for optimal compound interest strategies.
Investments Evaluation
- Use the Rule of 72 to assess investment returns; consider different scenarios like savings deposits, government bonds, mutual funds, and stocks.
Inflation Rate Impact
Understanding inflation rates is essential for financial planning and staying ahead financially.
Inflation Rate Insights
- Inflation rate signifies price increases over time affecting goods and services; use the Rule of 72 to plan against inflation's impact on purchasing power.
Savings Strategies
Utilize the Rule of 72 for savings projections and understand various saving options.
Savings Planning
Rule of 72: How to Double Your Money
In this section, the speaker explains the concept of the Rule of 72, illustrating how it can be used to estimate investment growth over time and emphasizing the importance of seeking higher interest rates for faster returns.
Understanding the Rule of 72
- The Rule of 72 calculates how long it takes for an investment to double based on a fixed annual interest rate.
- By dividing 72 by the annual interest rate percentage, you can determine the number of years needed for your investment to double.
Seeking Higher Returns
- Exploring investment programs offering guaranteed minimum interest rates between 4% and 7% annually.
- Advising viewers to consult financial advisors for better investment options that yield higher returns than traditional savings accounts.
Rule of 72: How to Double Your Money (Part 2)
This segment delves deeper into applying the Rule of 72 practically by considering different interest rates and their impact on investment growth, highlighting the significance of patience in financial planning.
Practical Application
- Demonstrating how investing in a program with a guaranteed interest rate of 5% per year reduces the time needed to double your money compared to lower rates.
- Emphasizing that realistic interest rates may exceed 5%, leading to even faster growth in investments.
Importance of Patience
- Encouraging patience when waiting for savings to grow or aiming to outpace inflation rates through strategic financial decisions.