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Moss In USA Today: How Investors Can Double Their Money

Wes Moss was recently a contributor to USA Today, providing investors a simplified way to calculate how long an investment takes to double, given a fixed annual rate of interest.

In the USA Today article, Moss shares the formula for the ‘Rule of 72’ – a simplified way to calculate how long an investment takes to double, given a fixed annual rate of interest.

Stocks are one of many possible ways to invest your money. While the future is never guaranteed, history suggests that they have high potential returns. The long-term average return of the Standard and Poor’s 500 Index is about 10% per year from 1928 to 2014. Warren Buffett several years ago, in the aftermath of the financial crisis, said that investors should expect a return of 6% to 7% a year.

Keep in mind that these are long-term averages. The market can go down in one year, and you have to wait a couple of years for things to turn around. That’s why it’s best to invest money that you most likely don’t need for several years.

The “rule of 72” is a simplified way to calculate how long an investment takes to double, given a fixed annual rate of interest. You divide 72 by the annual rate of return you receive on your investments, and that number is a rough estimate of years it takes to double your money.

For example, $1 invested at 10% takes 7.2 years (72 divided by 10) to turn into $2.

The rule of 72 is just math, but it’s an extremely helpful rule of thumb to put the marathon of investing into perspective. Think through what you use your savings for, and make sure you use them in a way that allows your money to reach its full potential.

Read the original USA Today article here.


 

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