The number “72”, What is so special about this number? Many of us know that it is the:

• The smallest Achilles number
• Or the measurement of an exterior angle of a regular pentagon (72 degrees)

But these are not the reasons why I consider it special. I consider it special because of my favorite scientist from the 20^th century.

He is none other than Albert Einstein who gave the world its most famous equation, E=mc² otherwise known as the “Theory of Relativity”.

As he comes from a physics and mathematician background very few know that he gave the world of finance its most famous rule called “The Rule of 72”. Interesting right? How a mathematical concept from a scientist is a guiding talisman to the world of finance.

So what even is the “Rule of 72”?  

“Take the number 72 and divide it by the Annual Rate of Interest that your money is earning to determine the number of years it will take your money to double 

Refer to the table below:

Let’s assume two things, 1) That we are going to invest $10,000 by the age of 29

                                               2) The age for retirement is 65

In the first column, if the rate of return for our money is 2%, by using the Rule of 72 (in this case, 72/2) we see that our money invested will double every 36 years. By using this same logic, we can see that in the last column that if our rate of interest is 8%, we will have $160,000 at age 65. As our money will double every 9 years. (Keep in mind that the rate of interest is the same for each year)

So how many years of our working and non-working life do we have to wait for our money to double? Or does it mean that we will be able to double every year if we can find an engine that returns 72%? 

Yes, we all want our money to double faster, but we must keep in mind something very practical and realistic. These are the “7 components of investments” we must keep in mind before we invest. 

The picture below shows these 7 components in action and how we must look at each and every one in the right way.

Don’t wait Act now

So is there an engine that helps you address the 7 Components effectively?

You bet there is. And at WealthBeing we believe that everyone is entitled to know how money works and how they can make it work harder for them.