Rule of 72

Prepare for Retirement by Doubling Your Investments

When working full-time for a company that provides benefits, most people determine how much they want put into retirement each paycheck and let time take care of the rest. If you own your own business, retirement is a greater concern. As a business owner, you must design your own retirement plan, ensuring that you and your family’s futures are taken care of. And while retirement may be decades away for some of you, the longer you wait to prepare for it, the less comfortable you’ll be when that golden age arrives. Because while you may currently love what you’re doing, you may want the freedom to do something else when you’re 65.

As a business owner looking for ways to prepare for retirement, you must become a good investor. Good investors know how to put their money to work earning the greatest return. Good investors also recognize the value of compound interest. That is to say they recognize that they can greatly increase their return by adding the interest to the principal and reinvesting it, allowing the compound sum of the principal and the interest to earn even more interest.

Rule of 72The Rule of 72 is an economic formula designed to inform investors of the potential return on their compounded investment. Divide 72 by the interest rate you anticipate earning and that determines how many years it will take to double your initial investment.

Let’s say you purchased $25,000 in bonds earning 6% interest. The Rule of ’72 would work as follows:

Rule of 72

72 ÷ interest rate = years to double your initial investment72 ÷ 6 = 12 years

After 12 years your initial investment of $25,000 would double to $50,000.

But let’s imagine you don’t currently have $25,000 to invest. Let’s say you have a more modest amount, $10,000, and you decide to open an Individual Retirement Account (IRA) earning 4% interest. Here’s how you could reinvest that initial investment plus its interest to double, triple, and even quadruple that initial investment in preparation for your retirement:

Rule of 72Divided by 4% interest

Years to Double 1818 (36 since initial investment)18 (54 since initial investment)18 (72 since initial investment)18 (98 since initial investment)

The most important thing to recognize here is that making the decision to double your investment is the only way to have it happen. As you can see, the longer you wait to start, the longer it will take to see significant results.

Put Rule 72 to Work for YouFirst, decide how soon you’d like to see your money double. Be realistic; generally the investment vehicles with the highest interest rates are the riskiest. Do your research and see what interest rates are reasonable and worth banking your future on. Pick your investment vehicle: savings account, stocks, bonds, IRA’s, real estate, etc. Then get started! And remember, the more investments you have, the greater your final return. Don’t worry if your initial investments are small; just imagine how much smaller your return will be later if you don’t invest now!

When you’re your own boss, you’re responsible for providing yourself with the benefits you and your family deserve. If you’ve been procrastinating your retirement, then procrastinate no more! Start doubling your money today. It is always sound advice to be able to put the reserves away for your “Golden Years”. We encourage those who currently have their own business to place their working capital and profits to work for them in the long run and to keep away from the “blinders” mentality when you are currently making good money.

For those who aren’t making the money that they can put into a retirement fund or that you are just starting out on this path to owning your own accounting business, Universal Accounting is here to help. No we cannot set up your retirement package, nor make the personal investments that will cause it to grow. However, when you invest in yourself, with the proper training, know-how and resources for sound accounting business principles, then you can make what you want when you want to.

Check out the tools and materials you will receive once you enroll yourself into the program that has changed the lives of thousands of like-minded individuals. Click Here to get all you need to make the best decision!