Download Doubling your money using the Rule of 72

Doubling your money using the Rule of 72
Fellow Investors,
In real estate we are often working to double our investment in the shortest time. We can use
Albert Einstein’s Rule of 72 to quickly find out how long it will take.
The simple formula- take the interest rate you will be earning and divide it by 72. The answer
is how long it will take to double. As an example: 8% interest 72 divided by 8 = 9 years.
John and his wife have saved $100,000 to carry them into retirement. They have their money in
a bank earning 3% interest. 72 divided by 3 = 24 years. In 24 years they will have $200,000.
If John shifts it into an investment earning 10%, what is the change? 72 divided by 10 = 7.2
years. If John invests for 24 years it will double three times: $200K, $400K, 800K.
Practical Application
Let’s say John meets you and you explain the advantage of a tax deferred self directed IRA.
(Independent Retirement Account) John realizes that he will be earning 28-30% interest simply
being tax deferred. You give John a 20% return investing with you. Let’s calculate that 30%
(Tax deferred) 20% Performance = 50%
72 divided by 50=1.44 years. Every 2 years John’s money doubles.
In 10 years John’s money doubles 5 times. His 100K becomes 200K, 400K, 800K, 1.6 Million
finally 3.2 Million at the end of ten years. Is John going to retire more comfortably with 3.2
Million? Absolutely!!!
Are you going to benefit using his money in real estate making you and him very successful???
Self Directed IRAs can be a powerful tool to build your investment cash quickly. Help your
investors and you realize financial success.
Someone having a baby!!
Want your child to have a better financial future? Provide for the expected expenses. At birth,
start a Self Directed IRA with $4,000. By the time the child is 18 years old their money will
double 9 times. $4K--8K, 16K, 32K, 64K, 128K, 256K, 512K, 1.02 Million, 2.04 Million.
What expense will the child have at age 18? A car and college? Imagine paying cash for both.
After graduation, they have the down payment for their first home, and keep the rest in the IRA
to give them retirement. You can benefit by using their money to finance your deals.
Extra Credit-Rule of 114, Rule of 144
How long does it takes to Triple your money divide by 114, 114 divided by 10%= 11.4 years
Quadruple your money divide by 144. 144 divided by 10= 14.4 years
Rule of 72 in Reverse
Let’s say we want to double money in 6 years. What interest rate will we need to get to there?
Take 72 divide it by the years. The answer is the interest rate necessary to double your money.
Example
72 divided by 6 years = 12% interest. To double your money in 6 years you need 12% interest.
Remember
The Rule of 72 is a quick approximation, the actual time will vary slightly as the interest rate
goes higher than 10%.
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