How to turn $1,000 into $64,000 using The Rule Of 72.
The Rule of 72 is a straightforward calculation used by many in the finance industry to estimate how long it will take your money to double, based on the rate of return you earn on it. To use it, simply divide 72 by the rate of return you expect to earn on your investment. The result is an estimate of the number of years until that money will be twice the size of when you started with it.
If you are able to invest your money for 45 years and earn a 10% annual rate of return — not that far out of line with the market’s long-run average — your money can double for you more than six times. That’s enough to turn $1,000 into $64,000. That would make a decent dent in the nest egg you’d need to comfortably retire, all from a one-time investment — but it’s only available to you if you start early.
But if you didn’t start investing with your first paycheck and are closer to 50 years old then every little bit you can sock away helps. Four investments that double twice are worth about as much to you as one investment of the same amount that doubles four times. No matter where you are on your investing journey, each investment you make from today on adds to the stash working to make your future that much more financially secure and comfortable.
Debt freedom and financial independence is a worthwhile endeavor. The knowledge needed is readily available on the Internet for free, or perhaps a $39 first year membership in the Contrarian Portfolio will help.