Learn this rule and find that doubling assets is so simple
It is said that
The gap between people is from
The cognitive bias of “complex interest” begins
So what is “complex interest”?
When I was a child, I had an origami experience. So, if we have a large enough paper in our hands and repeat it 64 times, how high will it be?
Many people will think, how thick is a piece of paper? A thin layer is almost negligible. 64 times? The quantity is not big! 64 folds, 10 meters? 20 meters? Is this already the limit?
But in fact, a thin piece of paper, folded 64 times, its height is 16600.96 million kilometers, what is the concept of this length? The distance from the earth to the moon is only 384,000 kilometers.
“If I fold it a third time, I’ll see that it’s 8 pages thick. Paper folding is exponential, so that if I fold it a fourth time, it’ll be 16 pages thick (so that option is clearly wrong), a fifth time will give me 32 pages thick, and so on. By time I get to 9 foldings, my folded paper is bigger than my original ream of 500 sheets. By time I get to 20 foldings, my folded paper is more than 10 kilometers high, which surpasses Mt. Everest. 41 foldings will get me slightly more than halfway to the Moon, so that means that 42 foldings is all it takes”
Suppose you have a deposit of 10,000 INR. Yield is 8%. Let’s compare
look, This is the magic of compound interest.
Simply put, It’s just a lot of accumulation, thick and thin hair
There is an interesting rule in investment practice — the 72 rule. It means that if interest is paid by 1% compound interest. After 72 years, your principal will be doubled. If interest is paid by 2% compound interest. After 36 years, your principal will be doubled. And so on.
To put it bluntly, if the annual interest rate is 12%, the principal will be doubled after just 6 years. If the annual interest rate is 20%, it only takes 3.5 years.
HNW (high net worth) people in India and elsewhere maintain their interest rate at the range of 15–30%. So as you can imagine how fast they double their money.
DOUBLING THE ASSET FAST IS THE NAME OF THE GAME. THATS WHAT MATTERS IF YOU REALLY WANT TO ACCUMULATE WEALTH.
Therefore, according to this law, we can quickly calculate that if there is 1 million in hand and 15% of investment tools, about 4.8 years, 1 million can become 2 million.
By the same token, if you want to turn 500,000 into 1 million in 10 years, you only need to find an investment tool with a revenue of 7.2% to achieve your goal.
Although the 72 rule is not as accurate as the compound interest meter, it is very simple and relatively close. It can save you a lot of time when you don’t need accurate calculations.
Life is like snowballing
It is important to find a long slope
There is thick snow on the hillside
- Buffett Quotations
