The Rule of 72!

Albert Einstein once said that “Compound interest is the 8th wonder of the world - he who understands it, earns it, but he who doesn’t, pays it.”

When you invest or save money the goal is to receive a return.

But how does that return impact your finances when compounded?

That’s where the Rule of 72 comes in!

This rule states that if you take the percentage return you are receiving and divide it into 72 (as a whole number) it will tell you how long it will take for your money to double.

For example, if you put $100K into a savings account earning 1% in interest, divide 72 by 1 and you get 72 years - thats how long it will take for your $100K to double to $200K.

Whereas if you put $100K into an investment returning 8% each year, divide 72 by 8 and you get 9 - That means it will only take 9 years for your money to double to $200K.

And then another 9 years to double from $200K to $400K, etc.

After 36 years, your original $100K would become $1,600,000, just from compounding interest!

That’s the Rule of 72!

Follow/subscribe to learn more about finance!

———

Green Era Financial LLC is a registered investment adviser. This platform is solely for informational purposes and is not offering advisory services or sales of securities. Investing involves risk and possible loss of principle. This social media, YouTube, podcast, website, post is for informational purposes only and should not be regarded as personalized investment advice or relied upon for investment decisions. Comments by viewers and/or recognitions are no guarantee of future investment outcomes and do not ensure that a viewer will experience a higher level of performance or results. Public comments posted on this site are not selected, amended, deleted, or sorted in any way. Content herein is for educational purposes only and is not intended as advice. Cary Green is an employee of Green Era Financial LLC and may maintain positions in any securities discussed in this video. All opinions expressed are solely his own opinion and do not reflect the opinion of Green Era Financial LLC. Past performance is never a guarantee of future returns. This content should not be regarded as personalized investment advice or a reflection of the performance of Green Era Financial LLC or its clients. Nothing herein is intended to be a recommendation. Rather it is intended to illustrate a point or educate on a financial topic or principle. Current and future markets may differ significantly from those illustrated here. Please always seek to do your own research and consult a licensed financial professional before making any financial decisions or changes. Visit greenerafinancial.com for more info.