Some of the most important things that require mathematical skills that are the reason is that I learned in the fourth grade. Simple multiplication and division of two numbers tripled help my money.
There are two empirical rules of thumb that I use when I calculate how an investment will be profitable. One is the "rule of 72" The other is called the "rule of 115"
Read more: Here's another rule of thumb to decide how much at home, food and fun to spend.
Article 72
Article 72 states that show how fast you double your money. Share 72 by the interest rate. This is the number of years required to double your money.
For example, if you earned your money an interest rate of 8 percent, you double your money in 9 years (72 divided by 8 equals 9)
If your money earn interest at 5 per cent, double the 14.4 years (72 divided by 5 is equal to 14.4.)
If you earned your money meager interest rate of 1 percent, you have to - yes, you guessed it - a whopping 72 years to double.
Remember: This is a "golden rule", no iron clad law. Article 72 does not refer to the details that correspond to a significant dent in your statements, such as taxes and the costs of managing the fund.
But it's a useful guide to making a quick mental calculation of how long it will take to put up $ 10,000 $ 20,000 in. It is also can be a great reminder of the power of a single percentage point.
The difference 6-7 percent sound much. But the difference between double your money in 12 years compared to 10.3 years for your money to double seems much more important.
As a side note, the Rule of 72 assumes that the money "compounded annually" - a term that means that once a year, added interest to your principal and the entire amount is reinvested.
(Interest is the money that you have earned, the main money you started with.)
Rule 72 is also useful to illustrate the power of compounding tool -. Quoted "The most powerful force in the universe" Albert Einstein is as follows
Read more: The reason that the rich budget to.
Article 115
I recently learned of the rule of 115, which is a logical consequence of Article 72, if you think you is to double your money is not good enough, then Article 115 is for you. Overall, this shows how long it will take to triple your money.
I bet you can guess how the rule 115 parts of the interest rate by 115 It's time to triple your money.
For example, if you earned your money interest rate of 8 percent, which is expected to triple in 14 years (115 divided by 8 equals 14.3.)
If you interest your money at 5 percent, which is expected to triple in 23 years (115 divided by 5 is equal to 23)
Note that triple your money is simple - in a sense - to double your money. If you earn an interest rate of 5 percent, who spent 14 and a half trying to pass, but to triple only another nine years.
Read more: The basics of investing for beginners.
Compound interest is your friend
Also thanks to the power of compound interest. The greatest interest your money earns more money will work for you.
This assumes, to reinvest the interest, instead of spending it on new clothes or games.
Read more: The costs nothing and to save budget (if you invest and may be rich)?
I told a friend about these rules once, and they asked a fantastic theme - "How can I reinvest the interest How can I know whether I want to or not"
"If you do not receive each year, a check or a payment of your investment," I replied, "is likely to reinvest the interest."
See page - or computer screen - where you buy your money. You should see a little box that says. "Reinvestment interest and dividends" This picture will probably be there, whether you. In mutual funds, stocks, bonds and Exchange Traded Funds
Check this box, and then forget about it. Wait 14 years. Adjust triple your money.
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