I talk a lot here about the power of compounding. Here's a reader comment on this subject titled Comments: Posts of the Week -- October 10; Compounding. It was posted here one year ago today.
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This is a dumb question, but financial advisors say that your investments will double based on a certain calculation. Does that calculation assume that you'll continue investing the same amount, or is it based only on the amount used in the equation?
Thanks!
Posted by: beloml | November 30, 2006 at 03:00 PM
I'm assuming you're talking about the "rule of 72" (read more about it here: http://www.freemoneyfinance.com/2005/10/rule_of_72.html). It assumes NO additional investment -- it's simply the amount of time it takes your money to double (by itself) at a given rate of return.
Posted by: FMF | November 30, 2006 at 03:20 PM
Thanks for the quick response!
Posted by: beloml | November 30, 2006 at 03:35 PM