Albert Einstein once said, " The power of compound is much more powerful than the atomic bomb.
The Review is to add the interest earned to the original investment and continue to get paid in the way it is rolled forward.For example, a return rate of 10 % for an investment is assumed to be one million principal, with a profit of 100 million (1 million * 10 million = 100 000) in the first year, and the principal of the second year will be added to the interest rate.The second year's principal is 1.1 million, with a profit of 11.1 million (1.1 million * 10 percent = 110,000).In the eighth year, total investment profits have already exceeded the principal.The effect of copying is not shocking!
Can't wait to figure out how fast the recompound of investments will grow.Drop the "Compound Interest Table" ("Compound Interest Table)", which makes a big head!The following is a quick calculation that can help you quickly know how much time it takes to achieve what you want, yo.!
How often do the funds grow by double the effect of compound interest?
Try 72 Divide by Return on Investment!For example, the return on an investment is 6 %, so the amount of money for approximately 12 years can be doubled (72 ÷ 6 = 12 years).
Double?How long will it take to double it?How long has it been for a dollar to be invested in three yuan?The
uses 115 divided by the return on investment.Assuming that the same return rate is 6 %, the money will grow twice as long as 19 times (115 ÷ 6 = 19.17 years).
Estimation of Rising Prices
The 72 Rules and 115 Rules can not only calculate the return on investment, but also the amount of time it takes to calculate the price of an item, or twice as much as it takes.Assuming that the cost of living for a month is $30,000, the inflation rate is 3 %, and after 24 years (72 ÷ 3 = 24), the cost of living for a month will probably be $60,000.
Real rate of return
The calculation of the real return rate is determined by two important factors -- the Booked Rate and the Inflation Rate."Booked on Booked" refers to the interest rate paid by the book value of the investment.The Real Rate of Return is approximately the Booked Rate minus the Inflation Rate.
For example, an investment of $1 million, or 8 % of the book return, seems to be a satisfactory figure.Assuming a 4 % inflation rate, however, the actual return rate is 4 % (8 % - 4 % = 4 %).Therefore, even if the profit is 80 000, the actual purchasing power is only 40 000.
compound time becomes a component of the cumulative asset, but when the rate of inflation is > Booked rate, Time becomes a subtraction of the cumulative asset.
The above method is not fast and simple, and even if math is not good, it can make it easy to understand the investment of the solution!But the rapid calculation is just to help us to quickly estimate the benefits of investment. Don't forget to consider factors such as inflation rates and tax rates before we can use the actual purchasing power that we can use.
womany ’ s sweet tips:
1. When calculating the return on investment, an "real return" should be taken to reflect the actual purchasing power of the shipping currency.
2. Even though the rate of return is a method of accumulating wealth, it is essential that every year it is necessary to repay the money.
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