As the lessons for investing and planning my financial future progress, I am constantly amazed that the ‘experts’ push all these formulas that must be used for bettering my financial goals.
No offense experts – but let’s get real!
Rule of 72
Let’s take any number and apply the formula.
The way the formula works is like this – 72 divided by any % of return equals the amount of years it will take you to achieve your goal.
72 ÷ 12 = 6
What is that? Can you tell me? Who knows that they will earn 12%? That is one of the most unpredictable things in the world.
If we all knew that we would earn 12% on our investments, we’d all be doing it!
Another formula is based on your age and stocks proportions.
110 – Current Age = Stocks Allocation
The older you are the less stock investing you’ll be doing.
This may be true, but how about taking into account:
- You don’t want to invest in stocks at all
- What if you want to invest in a lot more than what the formula tells you
- Everyone has different interests – why follow formulas!
My solution is this – take everything with a grain of salt. Do your due diligence, but work out what is best for your needs, interests and amount of money you have invested!