Introduction Of The Rule of 72 to Double Your Money Through Investments
The Rule of 72 to Double Your Money Through Investments. The best investment funds in Colombia where people ask if the profitability was monthly and not all the investments, the doctors usually have an annual effective yield, so if we talk about 4% and you invest a thousand dollars you are going to get a thousand 40 dollars in a year because the yield is annual these many people say a thousand dollars to earn just 40 and n Or is it that with a thousand dollars you invest those thousand dollars and earn 2 thousand 40 out of the thousand you do not earn your net profits 43 many people say but for that it is useless it is too little those people do not understand.
The first year a thousand dollars were 40 dollars and if it spoke of 4% but in the second year
The power of Compound interest, which is something I already talked about in some other video, now this on the one hand because on the other hand, the compound interest for people who do not have a key is simply that it is in the first year a thousand dollars were 40 dollars and if it spoke of 4% but in the second year both the thousand dollars and the 40 households will generate interest, 4% of the thousands again another 40 and 4% of the 40 because it will be a higher percentage.
I do not have present and This interest percentage will generate interest in the following year also then when the interest generates interest it is called compound interest based on this, the rule of 72 arises which is a way to get an idea of how long then if it has We speak of annual effective yield because taking into account an investment percentage how many years does the investment take to double then 72 simply tells us 72 between the yield, for example, 72 between 4 so if we had a 4 percent effective yield it would not take 18 72 years of video 418 in doubles.
The money that is to say that if you invest in a thousand dollars at 4 percent annual cash in 18 years, your investment is worth two thousand dollars, also if we had, for example, 13 percent forgiveness, 7 percent yield Annual cash well, we would talk about what approximately 10.28 years we would have twice the money as such because we divide 72 by 7 clearly if we had 10% for example and a mentions this 10% for a very specific thing because we would have double the investment in approximately seven points the two years now because you mentioned 7 and 10 and 4 percent because let’s assume that inflation is 3 percent. Read more The Rule of 72 to Double Your Money Through Investments.
Which is something that is very few things we see considered as it should be if inflation is 7 3% and I have an investment that rents me at 10% in reality the song is 7 I have more money but in reality, it is not too say if I invest 10 percent annual cash in jazz in an investment fund or stocks or anything else because I in theory in seven points two years I have double the money if I have double the money in pesos or dollars they are whatever Let it be the currency but that money is worthless how much because it is known that 3% would be inflation, so to double my money I would have to take into account adding.
That percentage of inflation to the percentage of return
That percentage of inflation to the percentage of return that I need to truly double it, that is to say, that If I am going to invest to obtain double a thousand of my money in 18 years, that is to say, with what I tried, I mentioned the 4 percent return, I would have to invest at 7% to obtain a 7% interest. rés and profit to be able that after subtracting inflation there if I in 18 years double my money in real value because the money is going to be much more it is the same thing that happens with the houses that a person buys a house in 100 thousand dollars and after 10 years the candle sold 150 thousand and says the house was valued
When We see inflation we realize that 100,000 dollars of that time are worth approximately 155,000 dollars today in the whole house instead of being valued it became devalued then when we take into account inflation in the calculation of the rule of 72 we had to add to the Necessary profitability that we want us to have from the investment opportunity in which we are going to find as such. That is the amount to be able to increase a little more the time it will take us. Inflation is going to eat up part of our money Or in other words, inflation is part of the return that an investment obtains because investments are normally valued with inflation as well as houses.
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But then it is really what is left over after inflation that matters, so investment at 3 % is not an investment if inflation is 3% it is simply a way to preserve money as sometimes it is, for example, metal It’s precious like gold now this also works the other way around, that is to say, the rule of 72 I can apply it so that if I have 10 thousand dollars and I need to double the 10 thousand to be worth 20 thousand dollars I do it for example in a term let’s say of 8 years I can live 72 between 8 and it gives me that.
I need a return on investment of at least 9 percent if I want to take inflation into account then I would have to assume that for inflation of 3 percent I would need 12 percent of net annual effective return to cover inflation and in eight years having doubled my money this tells us several things the first is that normal investments can go from approximately 7 to 15 percent but just when we talk about 15 percent we talk about investments of very high profitability for people who know for people who do not know will say what it is then that I put a thousand dollars and in a year I earn about 150 net because.
A little more risk people who tell me I have a business that can Rent at 30 percent
I put a 150 doing something else taking some photos at a wedding or doing this or doing the other thing, yes, of course, active work I can earn any amount of money and also with a little more risk people who tell me I have a business that can Rent at 30 percent in three months or six months with more risk can also reduce the time and increase that profitability as such, but we are talking about work and we are talking about risk, which does not happen in investments because not all of them at least more controlled level. Like That The Rule of 72 to Double Your Money Through Investments.
The risk I mean in a business to lose everything because businesses can lose all our money all our capital as well as in the riskiest investments such as investment in stocks that can return 40 percent in a year and less 50 in the other, then this is where when we began to understand these concepts we began to understand the power of diversification and of terms and I set myself an objective as such and I realized that investments are a very good mechanism to make my money grow but they should not be thought of as a source of earning money but rather of preserving it and building my wealth and my long-term assets to earn money.
I need a business same passive income different from something other than only that I deposit money and I forgot about it because clearly in proportion to how much does it open up and how much value is generated will my profit go but something that I also put to work a mechanism as such of production of abundance and that is perhaps one of the most important things to invest, you need money then first perhaps before investing at least before investing large amounts and leaving them deposited for decades because thinking about how we can grow our income as such so that we can have a monthly percentage to invest but that our main source.
A investment if we are going to spend ten years or any number of years waiting
We do not think is going to be a investment if we are going to spend ten years or any number of years waiting for the money to double outside of that it has to compensate with inflation because it will be complicated that from then on we can spend money as if it were not for any problem that we really can live like a life of wealth and abundance just thinking about it unless.
We are talking about the investment is supremely large This only happens over time and the ideal is that you always focus on making the investment a complement to those that you already have as such in your finances well structured in terms of income. Understanding this and other concepts is part of structuring a great financial intelligence and that is something that I feel very proud of because I focus very well and my students and me in my training money in dance.