Modern Finance For The New Age Thinker

  Invest ing $ 100 in the stock market today could yield a significant return over time . Assuming you invest your money into a divers ified portfolio and that it remains invested for 100 years , your initial investment of $ 100 would be worth an estimated $ 22 , 800 in the year 2 120 . This estimate is based on historical stock market returns which have averaged around 10 % annually over the past century . While there 's no guarantee that this rate of return will continue indefinitely , investing with a long - term perspective has generally been successful for many investors over time . To maximize your chances of success when investing in stocks , it ’ s important to divers ify across different asset classes such as bonds and cash as well as stocks since each asset class has different risks and returns . Additionally , it 's important to be min...

What is the rule of 72? The Rule of 72 is a mathematical formula used to determine the approximate number of years it will take for an investment to double in value when compounded annually . The rule states that you divide 72 by the annual rate of return ( or interest rate ) to get the approximate number of years needed for your money to double . For example , if you invest $ 1 , 000 at a 6 % annual return , it would take approximately 12 years ($ 72 / 6 = 12 ) for your money to double . This calculation assumes that no additional contributions are made and all returns are reinvest ed into the same investment vehicle with consistent annual returns over time . The Rule of 72 can be helpful when determining how long it will take before an investment reaches a certain value . It can also be used to compare the potential returns of differ...