This morning I was pondering whether to compose a dry (but very educational!) post about the Rule of 72 or delve into something a little more fun. Let’s do a mix of both!
Life in my Twenties: School, work, socializing, acquiring cats, visiting all 50 states, performing at the Sydney Opera House, losing control of a giant parade balloon into a crowd of spectators at the DC July 4th parade, backpacking around the world… pretty much living as if life was both endless and ending tomorrow.
Rule of 72: The time it takes for an investment to double in value, based on interest rate.
Time = 72/(interest rate)
If investments return an average of 8%, the typical doubling period is 9 years.
The depressing reality: Every doubling period that you miss at the BEGINNING of your career is actually cutting off doubling periods at the END of your career, costing you potentially millions of dollars.
Here’s a graph to illustrate:
This illustrates how essential it is to either start investing EARLY or to work on finding investments with higher potential returns to make up the difference.
I didn’t have anywhere near $100k saved up by the end of my 20s, but I did have about 1/3 of that – enough for a down payment on my first home, which has now appreciated by over 300%.
By using leverage, real estate can help you unlock some of the ‘investment growth’ time that you may have lost along the way. Maybe you got a late start, maybe you had a low income, or maybe you were busy taking advantage of your youth (enjoy those pain-free knees while they last!), but there are ways to build your snowball and get it rolling even if you’re a little late to the party.
Want to learn more about taking the leap into real estate investing? We are putting the final videos together for our Real Estate Investing Primer online course, and would love to have you join us when it launches! Click here to join the waitlist.
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