The ‘rule of 72’ is a simple and easy way find out how long it will take an investment to double based on a fixed rate of return. When you divide 72 by the rate of return, you get an estimate of how many years it will take for an investment to double.
For example if you have $1000 invested at a 4% interest rate it would take about 18 years (72/4 = 18) to turn your investment into $2000.
The same can be used on debt that you may owe through credit cards, mortgage, etc, assuming you don’t make any payments at all. For example if you have $1000 in credit card debt and a 15% APR on the card your debt will double in about 4.8 years (72/15 = 4.8) if you don’t make any payments at all.
Whether it’s your savings account, CDs, bonds, stock dividends, or any other interest paying investment, the ‘rule of 72’ will give you an idea of how long it will take your money to double.
Investing for your retirement is one of the most important things you can do for your future. Taking advantage of an IRA (Individual Retirement Account) to help supplement your future retirement income is always a good idea. Which IRA is best for you?
Dividend ReInvestment Plans or DRIPs can be a convenient and cheap way of compounding growth in your investment portfolio. If you are not signed up in a DRIP, any dividend paying securities (i.e. stocks, mutual funds, REITs, etc.) that you own will deposit all dividend payments into the accounts those securities are attached or you will receive a check if there is no brokerage account.
With over 8,000 mutual funds to choose from, picking a few to put your money into can be a bit overwhelming. If you have a 401k, the human resource department dwindled the list down a bit, if your lucky. But which to choose?