72 rules of investment

> Compound interest is beyond imagination

The power of compound interest is best explained with an example. If you invest 5,000 yuan a month in a fund with an average annual return rate of 15%, the net value of the fund will reach 150 million after 40 years. Usually when you hear this number, you will mistakenly think that if you follow this condition, you will get 75 million in 20 years of investment. It turned out that it was not like that, but only about 7.5 million yuan, a full difference ten times faster!

Will cause such a result, of course, this is because of the effect of compound interest.However, through the sight of the 72 law, you can clearly see the future of the dragon.

> 72 is a magic number

Will it take a few years to double the amount invested? That is, no matter what the investment amount is, it will be twice that amount. For example, an investment of 100 yuan will become 200 yuan, an investment of 100,000 yuan will become 200,000 yuan, and of course an investment of 100 million yuan will also become 200 million yuan. The magic number of 72 gives a super perfect answer. The number of years required to double the investment is equal to "72" divided by the "return on investment". There are no complicated formulas and no exponential calculations, just such a simple formula, you can get the answer with mental arithmetic. Although this answer is not precise or approximate, it is sufficient as an investment decision.
For example, if the return on investment is 10%, it will take 7.2 years to double (=72/10); if the return on investment is 15%, the doubling time can be shortened to 4.8 years (=72/15).

> Doubled in 5 years is of great significance

A 15% rate of return on investment can double the amount of investment every 5 years. This is not trivial. It is equivalent to the accumulated amount that can be earned in this lifetime every 5 years. When you are reading this article, if you already have a wealth of 10 million, this is what you have accumulated for a lifetime until now. However, as long as another five years, you can easily earn another 10 million yuan, of course, provided that there is a 15% return every year. This seems to take a lifetime of wealth, which can now be earned in only 5 years, and it will double all the way. This also shows that whoever gets the first pot of gold in life earlier is the best portrayal of the winner.

This also states that the sooner you get rich, the more you will get richer in the future. And when you get older and cannot make money on your own, the money you have can continue to bring wealth. The supreme realm of financial management: When you travel to Paris and have coffee on the left bank leisurely, your money is still working hard to help you make money.

> The meaning of compound interest

Understanding the rule of 72 and the effect of compound interest cannot bring wealth "immediately", but it clearly conveys an important message that the rate of return on investment is very important and determines whether you have wealth in the "future". Think about it if A and B have 1 million at the same time at the age of 30, A will only deposit 2%, but B’s return on investment is 15%. When he retires at the age of 65, he uses the 72-rule mental arithmetic and A 100 Million can only double to 2 million. However, B's 1 million is doubled every 5 years, and it can be doubled 7 times in 35 years, which is 128 times the 7th power of 2 which is equivalent to 128 million. To be A or B, you decide for yourself!