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How Fast Can Your Money Double in Value?

Mathematics is certainly not for everyone. But there is one mathematical rule that is easy to understand no matter what your professional specialty is and that is the Rule of 72.

The Rule of 72 is a simplified way to determine how many years it will take your money to double in value based on a specified rate of return. Here’s the formula to help you determine the time frame:

Why Is This Important?

When it comes to your money, it’s important to realize where you are, where you want to be, and how to get there. With the Rule of 72, you are able to conceptualize how long it will take for your investment to double in value based on an assumed rate of return. While there are generally no guarantees when it comes to investing, it’s important to grasp the fundamentals of why your money is invested where it is. Having strong convictions in your financial decisions will help you keep peace of mind.

Let’s Jump Into A Rule of 72 Example

You want to begin saving for retirement. You currently have $1,000 available in your savings account to invest, but you are not sure what investment vehicle will double your money the fastest.

The chart below applies the Rule of 72 to four different hypothetical investment scenarios: an investment in a stock portfolio, a bond portfolio, certificates of deposit (CDs), and money market funds, to determine how many years it will take for your $1,000 investment to double.

Money-Saving Habits Worth Something Big

Now that you have a general understanding of how the Rule of 72 works, let’s talk about how smart money-saving habits can affect long-term results.

The previous example showed how a $1,000 investment grew to $2,000 without contributing any additional money. But what would happen if you contributed money to your investment every month? That’s where the power of compounding returns comes in.

This next example demonstrates what happens when you stay dedicated to a savings plan of $200 a month for the next 30 years (remember, this is for your long-term goal of retirement) and, ultimately, allowing your money to grow over time.

How Do I Start?

As mentioned, it takes time for your money to grow, and, unfortunately, there is no magic recipe for financial success. However, Jemma’s experienced Financial Advisors specialize in helping clients, like you, that seek to reach their desired level of financial achievement. At Jemma Financial, our job is to help you uncover your short- and long-term goals and develop a financial roadmap that puts you on a path to a more secure financial future. Whether you are 25, 45, or 65, your financial future matters. Visit our website today and take advantage of our complimentary consultation. Your future self will be glad you did.

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