Tuesday, July 15, 2014

Double Your Money, Rule-of-72

"How long will it take to double my money?"

Have this question ever crossed your mind? May pag-asa ba ang ating perang naiimpok ay lumago ng doble sa ating naitabi for savings?  There is a powerful formula we can use to help us estimate what we need to save for milestones such as retirement, children's education, etc. 

The Rule of 72 
The Rule of 72 simply calculate how long your savings will take to double in value at any given rate of return.. It lets you approximate how your money will grow in an investment account. 

Here is how you can  calculate it:
Divide 72 by the current interest rate to determine the number of years that it will take to double your initial savings amount.

72 divided by interest rate = number of years needed for the amount to double.

For example, if you invest Php 100,000 in an investment fund at a 4 percent interest rate, it will take 18 years for your initial savings of Php 100,000 to double (This calculation assumes that the interest rate remains the same over time).

You can also use the rule of 72 to determine the rate of return needed to double your money over a specific period of time. For example, if you have Php 100,000 that you want to double for college tuition in 10 years. You’ll need 7.2% annually compounded investment vehicle to reach that goal.

Usually banks offered 0.25% interest in savings account but interest earnings are charged 20% creditable withholding tax, which even reduces the net yield even more. Kaya dito papasok ang ating due diligence upang alamin saan natin pwedeng iparada ang ating perang naitatabi upang ito ay lumago pa over TIME and to beat the inflation. Maging maingat din tayo dahil baka sa sobrang laki ng interest rate of return na maioffer sa atin ay scam na pala ito. Importanteng malaman natin ang simple formula of rule of 72 technique at maintindihan. There are no investments that will double your money without any risk short term.

Start saving today and take advantage of the time and compound interest. Get a quick illustration how time and good investment can help you reach your goal using the Rule of 72. Just 10% of your monthly income invested over time will make a huge difference in how and when you retire someday. 


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