The Rule of 72

During my late night reading yesterday, I was reminded of something which I learnt from another book some time ago. I'd like to share it here as I find this pretty useful. Developed by mathematicians, The Rule of 72 illustrates the power of compounding.

Divide 72 by the rate of return of any investment and the answer you get is the approximate number of years it takes for that investment to double in value.

For instance, if you invest $50,000 at a return of 2%, it will take 36 years before it grows to $100,000. But if the same $50,000 is invested at a higher yield of 6%, it will take just 12 years to multiply your money to $100,000. With this formula, at least I'll know how many % yield I should be looking at when I invest :)

Hope you find this info useful too.

The Rule of 70

Suaku me just learnt something new late last night - The Rule of 70. The Rule of 70 calculates the impact of inflation on your savings, specifically, it tells you the number of years it takes to shrink your savings by half. Assuming the inflation rate is 3.5%, dividing 70 by 3.5 gives you 20 - the number of years it takes to reduce your $100 to just $50. Scary, isn't it?

Just one goal

Why do we need so many goals? Often at the end or start of a new year, people will start making goals for the new year. I often hear people saying goals must cover various aspects of your life - career, financial, relationship, spiritual, health etc. I used to set my goals that way too but I have never been able to achieve all of them in the same year.

I've come to the realisation that very often, there is only one key goal that we truly need to achieve. It is often the one which will solve all other issues when we achieved it. You may not agree with me, but I think financial goal is 'the one'. Though money is not everything, yet without money, one becomes nothing. Don't bother to talk about upgrading one's skills or knowledge, starting a small little business or going on holidays. Even healthy living requires certain level of financial capability. How else can you go organic, eat wholesome, unprocessed food if you can't even afford them?

Whoever says money is not important surely has been living in delusion. How else can you help others if you don't have the financial means? Building homes and orphanages, feeding the poor, going on mission trips - all these require money. Unless you have powerful persuasion skills to make others part with their money, you better be rich if you want to help others.

You probably guessed it. Yes, I shall not be so ambitious in goal setting this year. Just one key goal and when I achieve it, the rest will gradually fall in place :) Sure, I'll still do my best to live a healthy lifestyle and strike a balance in life. I guess the biggest challenge for me is to stay focused. There are so many things that I'd like to do but for now, I must focus, focus, focus.