Get Wealthy With the Rule of 72

When it comes time to retire how many people would like to have a nest egg that is 2 or 3 or even 4 times larger than what they have? With an answer so obvious allow me to explain how you can make it happen for yourself.

First we'll explain the Rule of 72. If you divide the number 72 by the rate of return on your investments the answer is the number of years it will take to double your money. If you are getting 7% annually then 72 divided by 7 equals a little over 10 so it takes 10 years to double. A 9% return divided into 72 gives us an 8-year time span to double. A 10% return needs only 7 years to double.

Now what return can reasonably be expected in our real world? Over the last 100 years or so the United States stock market has returned 10 to 11% per year on average, depending whose figures one reads. We'll use the figure 10%.

Suppose at age 37 you start saving for retirement. We choose a reasonable sum of 110 dollars a month. In 7 years you notice that you have accumulated 13,200 dollars. Another 7 years go by and you see that you have nearly $40,000. At the end of 21 years you have $93,000. By age 65 you notice that 28 years have gone by and you have $200,000 dollars. The rate of return kept steadily increasing. Those of you with some mathematical leanings will recognize this as an exponential rate and also as compound interest. This website has a good calculator: http://www.tcalc.com/tvwww.dll?Save

Also notice that 28 represents four 7-year spans, time for the first dollars to double four times. Observe that during the first 7-year period you accumulated $13,000, during the 2nd 7-year period $27,000, during the 3rd 7-year period $43,000 and during the 4th period $107,000. During the 4th period you grew eight times as much as in the first period. All without changing the amount saved, $110 per month.

You think to yourself "I wish I could have twice as much". You may have figured out where this is going. Just START 7 YEARS EARLIER. Now at the end of 35 years you have $414,000, just for starting sooner. And if you start another 7 years earlier, imagine, $846,000. You accumulate $214,000 during the fifth 7-year period and $432,000 during the sixth 7-year period. Sixteen times and thirty-two times the amount in the first 7-year period. All for the same 110 dollars a month!

Yes, I know. This would require beginning saving at age 23, a very difficult thing to do. I also realize that those people with marginal incomes just don't have money to save and also that younger people usual have lower earnings power and incomes. I'm trying to make the point that to whatever extent you can follow this start-early concept it will pay off handsomely by the time you reach retirement.

Albert Einstein wrote that he believed the most marvelous thing in the universe was compound interest. You can put it to work and double or triple your retirement savings. Save as much as you can, save regularly but most of all start as EARLY as possible.

Play music like you always wanted. Gain the knowledge you need to cut out most of the drudgery of endless practice. Dr. Moloney is a retired Family Practitioner with a lifelong interest in music and teaching. Empower yourself to take charge of your learning by studying his E-book. http://www.musicsimplified.com/

Investing in stocks: Is it time to get back into the market?
Independent, UK - 12 hours ago
James Smith, the chief investment officer of specialist funds at Resolution Asset Management, believes that equities are up to 30 per cent undervalued in ...

When investing comes down to a toss of the coin
Globe and Mail, Canada - 4 hours ago
Here's a harder, more provocative one that ultimately can teach us a lesson about investing: Understanding the career of Sherry Lansing, who ran Paramount's ...

Investing in the next generation
Scotsman, United Kingdom - 12 hours ago
For the eldest child he uses the Witan Jump savings plan, based on Witan's multi-manager investment trust. For the others he invests in child savings plans ...
Giving your child a financial jump-start Scotsman
all 5 news articles

Saturday Interview Investing in Longevity and Security
New York Times, United States - 9 hours ago
By MICKEY MEECE ON Monday, Theodore A. Mathas left his old office at one end of the 13th floor of the New York Life Building to move into the corner office ...

Exchange traded funds change investing
Vancouver Sun,  Canada - Jul 4, 2008
Mawer's World Investment fund has been named Canada's top international fund four of the past six years, and fund manager Gerald Cooper-Key was named 2007 ...

BiggerPockets a forum for real estate investing
Chicago Tribune, United States - Jul 4, 2008
The special-interest media and publishing company offers free tools and resources on real estate investing throughout the country, educating and uniting the ...

The 10 Commandments Of Muni-Bond Investing
Forbes, NY - Jul 3, 2008
Simply read and follow the new 10 Commandments of Municipal Bond Investing and thou shalt have the where-with-all to survive the credit crisis. ...

BBC News
The Five Secrets to Succeed at Bear Market Investing
Money Morning - Jul 2, 2008
But here’s the ultimate irony: Bear-market investing offers a direct pathway to the biggest profit opportunities most investors will ever see. ...
Investing in Commodities: Diversification or Hedging? Seeking Alpha
Investing Strategies for Today's Bear Market Smartmoney.com
Future secure for cap-weighted indices Global Pensions
istockAnalyst.com - Globe and Mailall 312 news articles

The Investing Mistake That Could Destroy Your Retirement
Motley Fool - Jul 3, 2008
You direct your contributions into the asset class or investment style that suits your needs -- large-caps, growth stocks, small-cap value stocks, ...
Get These Stocks Out Of Your IRA! Motley Fool
all 2 news articles

Consider investing in local invention
Galesburg Register-Mail, IL - 14 hours ago
Forrest City, Iowa, got behind the Winnebago Motor Home Factory by investing money in it. Mr. Hunt’s plan when put into operation could have far reaching ...

Wind Chimes and more...

Windchimes for great gifts!

Index Trading Weekly Update