The Rule of 72

One of the best ways to illustrate compound interest is the Rule of 72. It shows you how many years it would take you to double your money.

Here's the formula:

72/rate of return = years to double your money

The rule of 72 unveils the powerful impact of compound interest  on money. It also reveals 2 types of people:

- People who don't understand how money works - they end up working for money.

- People who understand how money works - they let money work for them.

Wealthy people tend to spend time learning and understanding how money works. They look for advice and solutions to get better returns for their money.

A lot of poor people lack knowledge about personal finance. Some don't care to understand it at all. Many have no plan and little savings. What savings they have are usually put into accounts with a low rate of return. Their money doesn't work for them.

-from "The Secret to Saving & Building Your Future"

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fun fact : The Rule of 72 was a complicated formula of compounding interest, but was simplified by no other than the great genius himself Albert Einstein