FYI: I teach new investors about compound rates of return by employing the Rule of 72. You take a yearly rate of return – say 7% – and divide it into the number 72 to find out how many years it takes to double. So, in this example, an investor receiving a 7% rate of return will see his or her money double in ten years. At 5% a year, an investor will wait 14 years to see their investment double. At 9% a year, they’ll wait just 8 years.
It works backwards too – you can ask “What rate of return must I earn in order to double my money in the next six years and the answer is 72 divided by 6 – you’ll need to compound at 12% for six years in order to get there.
Doubling one’s money throughout their life, multiple times, is the only chance most people have of getting rich. Go look at the entire Forbes 400 list. Everyone on there started a business (or inherited one) and watched its value appreciate over time, doubling and then doubling again and then doubling again. Or the value they recieved from the sale of a business was reinvested into some other venture or real estate or collection or assets that went on to double and then double again. This is how real wealth is created.
Regards,
Ted
https://thereformedbroker.com/2019/03/07/double-your-money-2/
