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DOUBLE YOUR MONEY

There is a formula called the "Rule of 72" that you can use to calculate the number of years it will take to double your money when you invest it in a savings account, mutual fund, or other investment.

Here's how it works:

Divide 72 by the interest rate you expect to earn. This will demonstrate how many years it will take to double your money.

Example:

Assume you earn 6 percent interest on your money every year.

72 / 6 percent = 12 years

So, if you invest $500 at 6 percent interest, the money will double to $1,000 in 12 years—without your having to lift a finger.

Young people have an amazing ally when it comes to saving—time. The more you invest at a young age, the faster your money will work for you.

Take a look at these two retirement accounts.

Cooper's IRA
Brittany's IRA
Interest Rate
9 percent
9 percent
Number of Years of Contributions
10 years
(age 21 to age 31)
34 years
(age 31 to age 65)
Amount Contributed
$10,000/ $1000 year for 10 years
$10,000/ $1000 per year for 34 years
Value at Age 65
$284,541
$196,982

Cooper invests for only 10 years but ends up with a lot more money than Brittany. Why? Because he started young and let his money work for him. This is called the "time value of money."

Imagine how much they'd have if they had started at age 18 or 19.

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