Double the Cash

Imagine if you could put away a pile of cash, and have twice that amount down the road. That might sound too good, but any interest rate will eventually double your money.
The only question is, how long will it take?
Armed with a simple equation and a calculator, you can figure out exactly how long it will take for your money to double. It works like this: divide your interest rate into 72. Yeah, that's it. For example, 72 divided by 6 gives you 12. So if a sum of money is invested at 6%, that money will double in 12 years. Get it?
           Most people have heard at some point that saving money is important. Grandparents, parents, counselors and teachers told us to start a savings account, put some away for a rainy day. There are houses to buy and children to send to college, trips to take and retirements to plan for. And most banks are more than happy to help you start one. I heard a commercial on the radio urging customers to rush into ____ bank:"Right now! Start a savings account with ten thousand dollars and GET A 1.3% INTEREST RATE!! RIGHT NOW!" It
sounded like this was the hottest deal on the planet.
            Wait a second though. Apply that interest rate to the 72 equation: 72 divided by 1.3 gives you 55.38 years. That's most of a lifetime, isn't it? I just demonstrated how a 6% interest rate doubled money in 12 years. Hence, in that same 55 years, that same sum of money could double 4 times! That 1.3% savings account suddenly stops looking like
such a great idea.
           When you put money in a savings account, you are investing it. That money becomes an investment in your bank, with the bank paying you around a percent interest. Understand that the bank is investing your money at a much higher interest rate than that 1%-and collecting much more money than the few dollars you make at the end of the year.
           Is there a good reason why your money should collect interest for the bank? Shouldn't your hard-earned dollars just work for you? The investments that make 10, 12% interest are available to you-through a better route than a savings account. (Money invested at 12%, by the way, doubles every 6 years.) Allow me to clear up a common but often unspoken myth: it does not take thousands of dollars to start investing your money. Nor do you necessarily have to wait 20 or 30 years before you can reap the benefits of those investments. There are hundreds of different types of investment accounts. Some sit for 5 or 6 years, others can build for decades. If you continue to add money to your original investment-which really can be as small as a couple hundred dollars, your money will grow even faster.
           Remember, money in an investment account accrues interest every year. That means that every year you delay, you hold back your money-and add on to the amount of years it takes for your money to double.
 

Rates of interest, What they do, and How to calculate it

Doing the math
        To successfully graduate from most(if not all) high schools or colleges in this country-and several others, one is required to take a certain amount of mathematics. Arithmetic, algebra, geometry...accounting, business management, etc. Most of us
can do basic math and the rustiest algebra student can still manage to find the value of x.
          Unfortunately, even while we recall the struggles that went along with trying to figure out how fast two trains were going, we don't recall one crucial equation. It was entirely too easy to dismiss the equation for finding interest because no one fully explained how important that could be to your future. I=Prt or, Interest is determined by multiplying the principal(amount invested) by the rate of interest, times the amount of time(measured in years) that the investment builds. 
           Let me give an example. Imagine that you come up on a winning lottery ticket-not the powerball jackpot, mind you-I'm conjuring up a decent scratch-off, about a thousand dollars. Say you don't want to be frivolous. You've decided it's time to start a savings account. Most savings accounts hover around 1% annually. Now, that simple I=Prt can tell you exactly how much you'll reap every year in interest-simply replace the numbers. 1,000(P)x. 0.01(rate of 1%)x1(a year)=10(dollars of interest.) The following year, you'll pick up $10.10.
        A simple calculator can help you figure out how much interest any rate will yield-and unless you put that thousand dollars under the mattress, it will earn money.("But what if I spend it?" It'll still make money-just not for you.) There are a wide variety of places to put your money, depending on goals and needs. Unfortunately, I'm not licensed-yet-to discuss all of them in depth. But I would advice anyone who has not yet done so to start doing the research. Maybe get lined up with a company that offers a free financial needs analysis to all its clients.
        Whatever avenue you do decide to take, one thing is certain: delaying saving your money is costing you more than you think! Don't believe me? Do the math.