Time is an asset

Second only to a wise and disciplined Investment Advisor, the investor’s best ally is time. Too often, people come to me in a panic at the age of 40 because they have not invested any money for the future. I try to encourage people to start early to take advantage of the enormous power of compounding.

The Rule of 72

If you are wondering how long it will take to generate the funds you need, or how much you need to generate in a given time period, the Rule of 72 is helpful.

Your money will double according to this formula: 72 divided by your return (whatever return or interest your investments are yielding in a given year) equals the number of years it will take your money to double using that mode of investing.

Example: A 32-year-old who invests his inheritance of $200,000 at a 9% rate of return will have $3.1 million by the time he is 64 and ready to retire in style.

The Rule of 72 calculator

Click here for a Rule of 72 calculator to determine how long it will take to double your money at a given interest rate.

 

Links to other websites or references to products, services or publications other than those of Macquarie Private Wealth Inc. (MPW) on this website do not imply the endorsement or approval of such websites, products, services or publications by MPW. MPW makes no representations or warranties with respect to, and is not responsible or liable for, these websites, products, services or publications.