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One of the first things you need to learn about money is compound interest and the Rule of 72. The Rule of 72 states that you divide 72 by the rate of return you expect to get from an investment. The result that you get is the length of time in years that it takes to double your investment. So, if you were expecting an 8% rate of return, it would take 9 years to double your investment. This rule is effective in backtracking to figure out where you should be in relation to your retirement goals. If your goal is to retire at 65 with $3 million, this means that at 56 you would need to have $1.5 million! At 47, $750,000. $375,000 at 38. $187,500 at 29 and at the ripe old age of 20, you would already need to have $93,750! That's a lot of responsibility for a 20 year old to manage. Before you start to think that you have no hope now, you need to realize that this is only calculating the return on a 1 time investment and does not factor in additional contributions coming into the equation.
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