Thursday, January 17, 2008

Compound Interest is a Beautiful Thing....

Courtesy of the Wall Street Journal on Wednesday, the "Rule of 72":

"As you toy with whether to spend or save, keep in mind the rule of 72. If you divide 72 by the rate of return you expect to earn, that will tell you how long it takes to double your money.

Think you can earn 7% a year? Divide that into 72, and you will learn that doubling your money takes 10.2 years. The implication: If you saved $1,000, rather than spending it, you would have roughly $2,000 after 10 years, $4,000 after 20 years -- and an impressive $8,000 after 30 years."

I know that for most of our friends, the idea of saving money and compound interest is pretty easy to understand. I Just figured I'd help spread helpful information such as this to a country whose national savings rate is...negative. Sigh.


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