8th wonder

Albert Einstein - it was he who said that compounding interest is the 8th wonder of the world.

In IMG, we are taught that if you want to put your money in an institution, you need to know when it's going to double. that's why Einstein formulated the rule of 72.  It states that dividing 72 by the rate of interest will give you the number of years your money will double. Sounds simple right? Yes, it is!

In this way, you can plan for your long term goal, whether it be a retirement fund for yourself, an educational plan for your child, etc. You just need to have the discipline of living simply, not buying things you cannot afford, focus on your goal, and investing your money regularly in an institution that will give you substantial rates.

For myself, I invested in a mutual fund.  it's just like depositing my money in a bank.  Except for the higher interest I receive for my money and keeping it there for my long-term goals.

Knowing this information, I can't help but share this with my family and friends. it's sad to note that not all of us were taught the proper way of saving, more so putting our money on investments. 

Thanks to IMG, I'm on my way to financial freedom!

Never too late.  :)

Financial Literacy continued...

The second concept which was shared to me is the power of compound interest. Albert Einstein referred to it as the 8th wonder of the world.  He even formulated the Rule of 72 which states that '72 divided by the rate of interest (%) is equal to the number of years your money will double'.  
Because when we put our money, our savings, in an institution, we need to know when it will double.  To illustrate:
In simple interest
Suppose you have 100 pesos and you put it in a bank which gives 1% interest per annum (p.a.), after 1 year, you will  gain 1 peso ( which is 1% of 100).  After 2 years, 2 pesos, after 3 years, 3 pesos, and so on....so when wll your money double in value? In 100 years of course! Tsk! Isn't that too long? Will we still be alive by then? 
Now putting your 100 pesos with compound interest, applying the Rule of 72, we divide 72/1% and it gives us 72 years. See how wonderful it is? It's now 28 years less.
And of course, we will not settle for 1%.  We know there are facilities which give much more than that, we just need to look.