If you’ve recently taken an interest in finance, you may have heard of various rules and laws, each more varied than the last.
In this jungle of bizarre terms, it’s not always easy to find your way around. But Law 72 is well worth a closer look. So if you want to know what’s behind it, you’ve come to the right place!
In this article, we’ll explore a fascinating subject that could well change the way you look at your financial future: the famous Law 72, a powerful tool for building your wealth and securing your retirement.
3-2-1, let’s get started!
The basics
First of all, what is Law 72, you may ask? Well, Law 72 is not a complex legal text, but a simple concept that applies to investing and saving. It may seem modest, but it has the power to multiply your money over time.
Law 72 takes its name from the time it takes to double your investment, based on a given rate of return. And guess what? The higher the rate, the faster the magic of Law 72 works. It’s sometimes called the “Rule of 72” or “the magic of compound interest”. In other words, it’s the holy grail of investing for anyone who wants to achieve financial independence.
How does it work?
It’s really quite simple. You take the number 72 and divide it by the percentage rate of return on your investment. The result tells you how many years it would take to double your invested capital.
For example, if you invest at a rate of return of 8%, it will take you around 9 years (72 / 8) to double your initial investment. Incredible, isn’t it?
Imagine you invest CHF 10,000 today.
Thanks to Law 72, if you earn an 8% return, you’ll have CHF 20,000 in nine years. And if you let this money grow for another nine years, it will reach CHF 40,000. That’s the power of compound interest!
A concrete example
Let’s look at a few concrete scenarios to better understand how Law 72 can work for you. Let’s say you’re 30 years old and you invest CHF 5,000 with an annual return of 10%, which is a little higher than the historical average of the stock market… but as I said, it’s an example.
According to Law 72, it will take you around 7 years to double your initial investment, which means you’ll have CHF 10,000 by the time you’re 37. Continuing your investment, at age 67 you’ll have CHF 160,000. You can almost double that in retirement if you keep it up for a few more years.
That’s great, because it can provide you with a comfortable source of income for your retirement years.
Ideal law for good planning
Law 72 can be used to plan for many financial goals. Whether you want to save for a house, finance your children’s education or ensure a peaceful retirement, it can help you achieve these goals more quickly.
Imagine you want to save CHF 50,000 for the purchase of a house. Using Law 72, if you invest CHF 10,000 at a rate of 6%, you’ll reach that goal in just over eight years.
You see, Loi 72 can help you realize your financial dreams faster than you think.
A few tips to make the most of it
Now that you’ve understood Loi 72, the question is how can you use it to your advantage? So here are some practical tips to get you started:
- Start early: The magic of Law 72 lies in timing. The sooner you start, the more you can benefit from compound interest. Stop always putting off your investments, and start today.
- Save regularly: The cumulative effect is a key factor. Save and invest regularly to maximize the benefits of Law 72.
- Look for solid returns: Choose investments that offer a good return, such as stocks, dividend ETFs or mutual funds, to increase the rate of return you can use in the Law 72 formula.
The little conclusion
Remember that Law 72 is only one tool among many to help you achieve your financial goals. It’s not a substitute for overall financial planning, but it can be a great help.
Ultimately, Law 72 is an excellent way to understand how time and compound interest can work in your favor. It’s a powerful reminder that financial planning is essential for your future.
Remember, the key is to start early, stay disciplined and invest wisely and diversify.
All that’s left is for me to wish you an excellent day and…
To your investments!
Thank you for discussing the potential of creating and selling digital products as a means of making money. It’s an exciting and rapidly growing market.