Many know the name Albert Einstein.
Not Miley Cyrus.
Known as the father of modern physics, His contributions has greatly improved the field of science such as The Theory of Relativity and The Theory of Special Relativity. Could easily be one of the greatest man that ever lived.
But what does Albert Einstein got to do with finances?
It has something to do with his discovery of the rule of 72.
What is the rule of 72?
The rule of 72 lets us find out the time when our investment doubles given a fixed annual rate of return. It basically tells you how compounding interest works.
How does it work?
For example: Person A puts his 100K in a savings account which has 1% per annum. Person B puts his 100K in a mutual fund which has a 12% annual interest rate.
Person A
72/1=72 years before Person As money doubles to 200K
Person B
72/12= 6 years before Person Bs money doubles to 200K
It will really depend on which financial vehicle you will put your money. And no. If someone says to you that you will have 50% or 110% increase in just a month, that is just a scam.
But what does Albert Einstein got to do with finances?
It has something to do with his discovery of the rule of 72.
What is the rule of 72?
The rule of 72 lets us find out the time when our investment doubles given a fixed annual rate of return. It basically tells you how compounding interest works.
How does it work?
For example: Person A puts his 100K in a savings account which has 1% per annum. Person B puts his 100K in a mutual fund which has a 12% annual interest rate.
Person A
72/1=72 years before Person As money doubles to 200K
Person B
72/12= 6 years before Person Bs money doubles to 200K
It will really depend on which financial vehicle you will put your money. And no. If someone says to you that you will have 50% or 110% increase in just a month, that is just a scam.
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