- Personal Finance
How to Strike It Rich with the Banking Rule of 72?
Using the banking rule of 72 to your advantage in a mutual fund is cost effective. The secret is in the rate of interest! Will you invest your money in a high-interest bearing investment vehicle, today? The trick is to make sure you grow your money, so your money doubles every six years! If you have debt, then your money is working against you!
Money has a remarkable way of working hard for you, depending on how you feel about saving money. Your attitude towards your money determines how much money you'll have in the bank, most certainly!
Everyone desires to make more money, nevertheless, no one is willing to discipline themselves to do what is necessary to get their money to grow in a bank, or even patiently wait for the capital value of their assets to appreciate.
Building Money Follows Certain Fundamental Laws
Making money follows certain fundamental laws! Yes, laws like the laws of nature and the law of gravity. Spend heaps of money and you will never have enough money saved. Always think of the long road down the line, and remember to save for a rainy day. Remember, mostly everyone feels reluctant about lending money to friends and family. There is a good reason for this, since it's difficult to charge interest like a credit card.
Life is uncertain, you never know what you are going to get! Even so, when you have money saved, hard-earned cash, the variable mishaps don't hit home as hard. Cash fixes a lot of things! You need to discover how to best make money work for you! The more interest you earn the harder your money is working for you.
Spend Less Money
Everyone at some point in their life needs a little help with managing their money! The key to making your money work for you is saving and earning smart money on a consistent basis. Your feeling about saving more money is a strong leading indicator and a key factor to how much money you have saved in your accounts. To save more money, you have to decide not to needlessly and wastefully spend your money.
The more money you spend the less money you will be able to save. This is a given! It’s necessary to plan the life of your money, or else it will not last too long. Your money will not serve you. You’ll end up having more bills at the end of the month instead of a little nest egg of saving to build upon. When you're diligently saving your money, the faster your money grows in an interest-bearing account. Money begets money, always!
Save More Money
Find concrete ways to save money through a bit of sacrifice that’s practical. Borrow, books and DVDs at a public library, instead of purchasing new books and movies. Wear your clothes until they become shabby looking, and then wear your ragged clothes as comfortable pajamas.
The secret to making money is hoarding money in a regular bank account, afterwards find solid high yielding financial product that pays a high-interest rate. The higher the interest rate and yield the more money you’ll earn. And the harder your money works for you! In the long run, you want to become an investor and have money working for you before you reach your retirement.
Money never gets tired of working, however, you will grow tired of working one day! Since, you have limited energy, it's great, your money can keep working harder for you so you don’t have to!. You must know where and when to invest your money, and how to get high rates of return for your money.
Opening a gift saving's fund is a terrific way to have money for gifts during festive occasions. These savings accounts are relatively easy to open, and you’ll not even feel the pinch of your weekly contributions, since the addition of money is easy going. Ten dollars a week is the cost of an average lunch meal that you can safely save. This place of savings will take the tension off during special occasions, and you’ll not need to use your credit cards. It’s always a terrible idea to use store credit cards because they charge high-interest rates. By the time your loved ones use the gifts, you’ll end up paying hundreds of dollars more for them.
The Rule of 72
When looking for a financial product in a bank or brokerage company the best aspect to consider is the rate of interest paid. When a certificate of deposit or mutual fund pays a six percent interest rate, you can expect your money to double every twelve years. When a financial product pays a twelve percent rate of return, your money will double every six years. This means if you have $10,000.00 dollars saved, in 6 years you will have twenty thousand dollars and in 18 years you’ll have a nest egg of sixty thousand dollars. This is the dramatic effect of time and compounding interest that benefits you considerably. This is a universal banking law called the “Rule of 72”. You can make it work for you, or you can, unfortunately, make this banking rule work against you, if you owe money. Not many people are aware of this terrific rule! The banks aren't letting the general public know about the “Rule of 72” for fear of losing a plethora of money.
Taking Advantage of the Banking Rule of 72
When you owe heaps of money on a credit card, and you choose to pay the minimum payment every month, you end up paying the credit card companies an extravagant amount of interest money. Most credit cards charge between fourteen to a twenty-two percent or more. When you owe ten thousand dollars to Visa or MasterCard, you’ll pay these companies twenty thousand dollars in five years, if the interest charged is fourteen percent or if the interest rate is twenty-two percent you’ll repay them a whopping twenty thousand dollars in interest charges in three short years. Ouch!
You literally can determine how the interest tables work for you. You can make money work for you or against you when you know the secret of interest. When you have money saved in a bank or a secure fund, the interest money table’s work for you and your money grows as time goes by, especially when the rate of return is more than six percent. When you owe credit card companies money, the interest money tables work against you and you end up paying the credit card companies exponentially and end up with remarkably little change in your bank account. This happens, because all your money is going towards interest charges.
Be smart, have money work for you, always by not owing credit companies’ money and diligently save your money in high yielding interest funds, and happily watch your money double every couple of years.
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© 2010 Sheila Craan