The Worlds Best Get Rich Quick Formula!

Have you ever wondered how the wealthy get wealthier?

I’m sure most of you can guess that real estate is one way, but there is another. Its called compound interest. There is a formula that has been around for years. This formula is called the Rule of 72. The genius physicist, Einstein, regaled compound interest as the ninth wonder of the world!

The Rule of 72 tells you exactly how many years it will take for your money to double when calculating compound interest.

For example:
72 divided by interest rate of return = # of years it takes for your money to double.

So lets say you have $1,000 in your on line money market account and it is earning 3%. To figure out how many years it would take you to double your money, take 72 and divide it by 3% which would equal 24. It will take 24 years until you see your money double to $2,000!

To make this even more exciting, lets take that same formula but change the interest rate to 9%. Take 72 and divide it by 9%, which equals 8 years. What a huge difference a few more points can make! This concept is the big reason why you need to look at your savings account to see what your interest rate is. If the interest rate you are getting is .05% like most regular savings accounts, it could take you a really long time to see any amount of increase in your account! Now do you see why the interest rate you get when saving is so important to you?

When you understand this formula you can take it one step further and add your age into the equation.

Say today, you are 40; you have $20,000 in a savings account earning you 3%. With the calculation of the Rule of 72, you will be 64 years old before you will see your hard earned money double to $40,000. Change that savings interest rate to 9%, and in 8 years, and at age 48, your money will double to $40,000. By 56 you will see it double again! Which would you choose?

This is one of my favorite financial concepts to teach. Many of us do not realize what a difference a couple percentage points make, but in reality, just having this knowledge can make you rich quicker!

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