“The most powerful force in the universe is compound interest”
Einstein understood that the returns of compounding a small amount over time would lead to a significant amount. He therefore came up with the famous rule of 72. This states that if you take 72 and divide it by the Annual Percentage return, it will give you the number of years your investment would double.
For example, if the percentage return of your investments was 15%. So if you take 72/15 = 4.8 years. This means that a $10,000 investment would take 4.8 years to turn into 20,000 at an annual rate of return of 15%.
In the next post i will explain more on using the powers of compounding in Australian dollar investing.
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