Delivery Services for Kopitiam

Trying to finalise the workflow for Delivery Services for my kopitiam ....
Staff, scheduling, menus, brochures, transport, phone, database.
Exciting times ahead ... :)

The Rule of 72

The Rule of 72 is a quick way to estimate the effect of any growth rate in any financial calculations. Anybody who wants to become rich, financially free or grow their net worth need to know this formula. Here’s the formula:

Years to double = 72 / Interest Rate

This formula is useful for financial estimates and understanding the nature of compound interest. Examples:

• At 6% interest, your money takes 72/6 or 12 years to double.
• If you invested in ASB and are receiving 8% dividends, your money grows every 9 years (ie 72/8)
• If you are Warren Buffett, all your money invested in Berkshire Hathaway shares doubles every 3.1 years   (ie 72/23). Yes, his portfolio grew at 23% per annum! 
• To double your money in 10 years, get an interest rate of 72/10 or 7.2%.
• If your country’s GDP grows at 6% a year, the economy doubles in 72/6 or 12 years. Najib's target! 
• If your growth slips to 2%, it will double only in 36 years.... (yawn!).  If growth increases to 4%, the economy doubles in 18 years. Given the speed at which technology develops, shaving years off your growth time could be very important. Thus when one talks about investment, the velocity of money is extremely important.
• Thus whenever I collect my income, I never leave the money in the Savings account. I will quickly move it to another vehicle (moving at a faster speed).

You can also use the rule of 72 for expenses like inflation or interest:

• If inflation rates go from 2% to 3%, your money will lose half its value in 36 or 24 years.
• If college tuition increases at 5% per year (which is faster than inflation), tuition costs will double in 72/5 or about 14.4 years. If you pay 15% interest on your credit cards, the amount you owe will double in only 72/15 or 4.8 years!

The rule of 72 shows the power of compounding interest. This was what made Warren Buffett one of the wealthiest man alive. Use this rule whenever you think of finances or in making financial decisions. Remember : The velocity of money matters !