This rule has changed my life. I strongly believe every woman needs to know about the rule of 72. Regardless of your background, every woman deserves to have the knowledge that could change her life.
Pay close attention…
You can effortlessly turn $10,000 into $640,000.
The rule of 72 is a shortcut to estimate the number of years required to double your money at a given annual. The rule states that you divide the rate, expressed as a percentage, into 72:
Years required to double investment = 72 ÷ compound annual interest rate
The effect of compound interest is incredibly powerful and is one of the most important concepts to understand when it comes to building wealth. Here is an example:
If you invest $10,000 when you are 18 years old and receive an annual return of 9% you will have
$20,000 at age 26
$40,000 at age 34
$80,000 at age 42
$160,000 at age 50
$320,000 at age 58
$640,000 at age 66
9% doesn’t sound like a lot, and neither does $900 in the first year, but over the years, the effect of compounding is enormous.
Next time you think about splurging on that expensive car, purse, or phone you don’t need, remember the rule of 72 and consider investing the money instead.
Note : To keep things simple I’ve approximated the returns and ignored the impact of inflation and taxes. Since 1871 the the US stock market has a compound annual growth rate of 9.07%.
Is there another financial rule you believe every woman should know? Comment down below and let the empowerment begin!