The Way Money Works

The Rule of 72
The Rule of 72 is a simple way to determine how long it will take your money to double. Simply divide the number 72 by the interest rate you are earning to determine the answer.

The Rule of 100
The Rule of 100 relates to your age and the percentage of risk you should employ with respect to your investment portfolio. The Rule of 100 is a rather simple equation that takes the number 100 and subtracts your age to come up with a rule of thumb percentage for the amount of Risk vs. No-Risk Investments you should have in your portfolio. The older you are, and further into retirement you go, the amount of exposure for your portfolio should be less and less.

Here are some examples:
The number 100 – 65 (your age) = 35% which is the Max. amount of Risk you should accept in your portfolio.

The number 100 – 78 (your age) = 22% which is the Max. amount of Risk you should accept in your portfolio.

Please understand this is just a rule of thumb, and not an absolute! Everyone is different, and we take a custom approach to building the right formula for each of our client’s portfolios.

Many individuals and families believe their portfolios are low risk and well-balanced, but come into our offices and find out that their portfolios are taking on more risk than they are comfortable with. To receive an evaluation on where your portfolio stacks up with this rule of thumb please contact us for a no-cost initial consultation.

The rule of 72 is a mathematical concept that does not guarantee investment results or function as a predictor of how an investment will perform. It is simply an approximation of the impact of a targeted rate of return would have. Investments are subject to fluctuating returns and there is no assurance that any investment will double in value.