Your Safe Money Show Texting and Social Security 8 20 16

Your Safe Money Show Texting and Social Security 8 20 16

Rule of 72

Many times as a retirement income planner I am asked “How long will it take to double my money”? I find using the rule of 72 is a simple way to figure out the number of years it takes to double your money at an annual rate of return. You divide the rate, as a percentage into 72. So as an example: an investment with a 6 percent compound annual rate of return will take 12 years to double in value.

72 divided by 6 (rate of return) = 12 (number of years it will take to double an investment)
Financial planners like this formula because it’s easy to understand and it shows the value of saving even with modest or a reasonable rate of return on your investment. 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 24 years instead of 36. The rule of 72 is just math, but it's an extremely helpful rule of thumb to put the marathon of investing into perspective. Think through what you use your savings for, and make sure you use them in a way that allows your money to reach its full potential.

Your Safe Money Show Security Show 8 13 16

Your Safe Money Show Best of Show 8 6 16

Highlights for this week's August 6, Your Safe Money Show

For this week's Your Safe Money Show we'll be sharing highlights from shows from the past six months. Specifically we'll touch on unclaimed money, financial literacy, real rate of return, retirement accounts, and understanding national debt.

Procrastination and 401(k)'s

I would say one of the most significant psychological factors that keep people from achieving their saving and or retirement goals is procrastination…doing nothing. One way people procrastinate is with 401(k) plans.When a company offers to match a portion of what an employee contributes, that's free money, take it! Unfortunately procrastination sets in; it’s much easier to just imagine doing the right thing in the future. Many more employees say they plan to take action and enroll, than actually do. That’s why more companies have found success with automatic enrollment: In one company that adopted automatic enrollment (when employees first become eligible for the savings plan, they’re automatically enrolled unless they opt out), 401(k) participation rates for new workers increased from 49% to 86%. So automating aspects of your finances, could not only simplify your life, but also eliminate the tendency of procrastination.