The Difference 15 Years Can Make

July 28, 2021

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Rich & Kristina Messenger

Rich & Kristina Messenger

Senior Vice President



McKinney, TX

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May 3, 2021

The Rule of 72

The Rule of 72

So you’ve got a chunk of change and the know-how to put your money into an account that earns compoundING interest.

How long does it take for your money to double in that account? Well to find this out you need two things: your balance and your interest rate. Now, like most things there’s an easy way to find your answer and a hard way. The hard way involves taking the logarithm base 10 of 2. Two as in, two times our balance over the logarithm base 10 of 1 plus our interest rate. (Apologies for causing any unnecessary math class flashbacks.) Since most of us don’t have bionic brains, we can’t really crunch numbers like these in our heads.

The simple way to make an educated guess about how long it takes for your money to double in a compound interest account? The Rule of 72. The way it works is surprisingly easy (and won’t require a graphing calculator). All you do is take the number 72 and divide it by your interest rate. That’s it! It really is that straightforward. The number you get equals the number of years it’s going to take to double your money.

Let’s try it out: Say you have $5,000 in your account earning 4% interest. Now take that magical number 72, take your interest rate of 4%, pull out your phone and text your 2nd grade cousin and ask him how many times 4 goes into 72. He’s a bright kid, so he’ll tell you the answer is 18, and you’ll tell him that he just helped you learn that it will take 18 years for your initial $5,000 to double into $10,000.

Using the Rule of 72, it’s easier to see how small changes in interest rates can make a huge difference in earning potential. A 29-year-old earning 4% compounding interest can expect his account to double twice by the time he’s 65. At 8%, it doubles 4 times. At 12%, it doubles 8 times. So by doubling your interest rate from 4% to 8% you actually quadruple your money. And by tripling your rate from 4% to 12% you sixteentuple your money. That’ll work.

Interest rates matter. The Rule of 72 shows just how much they matter. So how many doubling periods does your nest-egg have before you retire? Now you know the easy way to find out.

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May 15, 2019

3 Advantages to Being the Early Bird

3 Advantages to Being the Early Bird

Extra-large-blonde-roast-with-a-double-shot-of-espresso, anyone?

As the old saying goes, “The early bird catches the worm.” But not everyone is an early riser, and getting up earlier than usual can throw off a night owl’s whole day.

But there are a couple of things that, if started early in life (and with copious amounts of caffeine, if you’re starting early in the day, too), could benefit you greatly later in life. For example, learning a second language.

The optimal age range for learning a second language is still up for debate among experts, but the consensus seems to be “the younger you start, the better.” It’s a good idea to start early – giving your brain an ample amount of time to develop the many agreed upon benefits of being bilingual that don’t show up until later in life:

  • Postponed onset of dementia and Alzheimer’s (by 4.5 years)
  • Much more efficient brain activity – more like a young adult’s brain
  • Greater cognitive reserve and ability to cope with disease

Imagine combining that increased brain power with a comfortable retirement – an important goal to start working towards early in life!

Here are 3 big advantages to starting your retirement savings early:

1. Less to put away each month.
Let’s say you’re 40 years old with little to no savings for retirement, but you’d like to have $1,000,000 when you retire at age 65. Twenty-five years may seem like plenty of time to achieve this goal, so how much would you need to put away each month to make that happen?

If you were stuffing money into your mattress (i.e., saving with no interest rate or rate of return), you would need to cram at least $3,333.33 in between the layers of memory foam every month. How about if you waited until you were 50 to start? Then you’d need to tuck no less than $5,555.55 around the coils. Every. Single. Month.

A savings plan that aggressive is simply not feasible for a majority of North Americans. Nearly half of Canadians and 78% of American full-time workers are just getting by, living paycheck-to-paycheck. So it makes sense that the earlier you start saving for retirement, the less you’ll need to put away each month. And the less you need to put away each month, the less stress will be put on your monthly budget – and the higher your potential to have a well-funded retirement when the time comes.

But what if you could start saving earlier and apply an interest rate? This is where the second advantage comes in…

2. Power of compounding.
The earlier you start saving for retirement, the longer amount of time your money has to grow and build on itself. A useful shortcut to figuring out how long it would take your money to double is the Rule of 72.

Never heard of it? Here’s how it works: Take the number 72 and divide it by your annual interest rate. The answer is approximately how many years it will take for money in an account to double.

For example, applying the Rule of 72 to $10,000 in an account at a 4% interest rate would look like this:

72 ÷ 4 = 18

That means it would take approximately 18 years for $10,000 to grow to $20,000 ($20,258 to be exact).

Using this formula reveals that the higher the interest rate, the less time it’s going to take your money to double, so be on the lookout for the highest interest rate you can find!

Getting a higher interest rate and combining it with the third advantage below? You’d be on a roll…

3. Lower life insurance premiums.
A well-tailored life insurance policy may help protect retirement savings. This is particularly important if you’re outlived by your spouse as he or she approaches their retirement years.

End-of-life costs can deal a serious blow to retirement savings. If you don’t have a strategy in place to help cover funeral expenses and the loss of income, the money your spouse might need may have to come out of your retirement savings.

One reason many people don’t consider life insurance as a method of protecting their retirement is that they think a policy would cost too much.

How much do you think a $250,000 term life insurance policy would cost for a healthy 30-year-old?

Less than $14 per month. That’s a cost that would easily fit into most budgets!

You may still need a little caffeine for the extra kick to get an early start on powering up your brain (or your retirement savings), but sacrificing a few brand-name cups of coffee per month could finance a well-tailored life insurance policy that has the potential to protect your retirement savings.

Contact me today, and together we can work on your financial strategy for retirement, including what kind of life insurance policy would best fit you and your needs. As for your journey to the brain-boosting benefits of being bilingual – just like with retirement, it’s never too late to start. And I’ll be here to cheer you on every step of the way!

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