Half of Americans Say They’d Lose Everything in a Recession: Here’s How To Be Prepared

Half of Americans Say They’d Lose Everything in a Recession: Here’s How To Be Prepared

Gabrielle Olya   Wed, March 8, 2023

While economists are having trouble predicting if and when a recession will hit, many Americans believe one is inevitable. Three-quarters of Americans (75%) worry there will be a recession in 2023, while 69% say one is already here, according to a new Real Estate Witch poll.

Even more alarming, more than half of Americans (55%) said they would lose everything if a recession occurred.

“Although the job market is strong and wages are rising, many Americans are at risk financially simply because the cost of living is rising faster than income,” said Jaime Seale, data writer at Clever Real Estate. “That causes Americans to dip into savings, retirement accounts or lean on high-interest credit cards. Once in debt, that can make it more difficult to get back on track financially.”

On a positive note, the majority of people (87%) said they are taking steps to prepare for a possible recession. Here’s a look at the ways Americans are prepping for an economic downturn — and which ways are the most effective.

Saving More Money

The majority of people (44%) said they are saving more money to prepare for a recession, which is a smart money move.

“One of the best ways to prepare for a recession is to put savings in an emergency fund to cover three to six months of expenses,” Seale said. “Americans should be able to draw from this account immediately if they lose their job or have an unexpected emergency.”

Having an emergency fund can help people stay out of debt, which is particularly important during a recession.

“Interest rates tend to rise during a recession,” Seale said, “and, if consumers have a variable rate, like on many credit cards, they could pay hundreds or even thousands of dollars extra each month, putting even more pressure on their finances in tough economic times.”

Other measures Americans are taking to prepare for a recession include cutting back on non-essential spending (44%) and taking on additional income (32%).

Paying Off Debt

To continue reading, please go to the original article here:

https://news.yahoo.com/half-americans-d-lose-everything-130024910.html

Why Everyone Should Have These 5 Types of Savings Accounts

Why Everyone Should Have These 5 Types of Savings Accounts

Heather Taylor   Tue, March 7, 2023

You might have heard of different types of savings accounts before, but how do you know which accounts are the best fit for your savings needs?

Your overall financial picture may require using one or more savings accounts to reach your financial goals. Let’s review some of the most common savings accounts and the types of savers these accounts make for an ideal match. Read on to see why everyone should have these savings accounts.

Savings Account

Ideal for: Someone who is beginning to grow their savings or wants to immediately access their money

Those who open a savings account may use it for short- or long-term savings. This money should always be available to you without withdrawal fees.

Jaspreet Chawla, SVP of savings products at Navy Federal Credit Union, said savings accounts pay interest on the money you deposit in the account. However, this interest typically isn’t significant. While the interest is smaller than other savings account options, Chawla said your money will always be accessible to you.

Money Market Savings Account

Ideal for: Those saving to reach a financial goal, such as building an emergency fund or making a large purchase

A money market savings account is a type of deposit savings account. It accumulates dividends based on the account balance. Compared to most savings accounts, a money market account pays interest on your deposits at a higher rate. This can help grow your funds, which can be easily accessed through ATM withdrawals, transfers and writing checks.

Keep in mind, however, there are certain requirements necessary for opening a money market savings account. Chawla said these accounts often have minimum balance requirements. The higher your balance, the greater your earnings will be.

High-Yield Savings Account

Ideal for: Short-term savings goals, like buying a car or taking a vacation, or storing an emergency fund

Ben McLaughlin, president at SaveBetter, said high-yield savings accounts are similar to traditional savings accounts but offer better interest rates. If you need to quickly access funds on short notice, you’ll often be able to do so with a high-yield savings account.

“Savers should note savings account rates are variable, meaning they may change at any time based on overall market conditions. The good news is banks are expected to continue offering even more attractive interest rates on average, as the Fed is widely anticipated to continue to increase rates,” McLaughlin said.

Savings Certificate

To continue reading, please go to the original article here:

https://news.yahoo.com/why-everyone-5-types-savings-120111573.html

Tax Refunds Are Coming Up Shy This Year

Tax Refunds Are Coming Up Shy This Year — to the tune of $300, on average. Here are the 2 big reasons why and what you should do about it

Bigger Isn't Always Better Though.

What are you looking forward to this spring? The Oscars? The return of Succession? King Charles III's coronation?   If you answered "a juicy tax return," we've got some bad news.

Early data from the Internal Revenue Service shows that as of Feb. 3 the average refund amount for those keeners who have filed their taxes is $1,963. That's a 10.8% decrease from average return of $2,201 on Feb. 4, 2022.

This comes as less of a surprise, as the IRS warned in a news release earlier this year that 'refunds may be smaller in 2023'.

What gives? Here's why 2023 won’t bring a hefty tax return for many households and what else you should know now that this year’s filing season is underway.

Why Refunds May Be Smaller This Year

During the pandemic, the IRS was doling out some pretty sizable refund checks. In 2022, the average tax refund was $3,176 — a 14% jump from $2,791 in 2021, according to the IRS.

But in 2022, there were no new stimulus checks from the federal government. And some expanded tax credits and deductions, like for charitable gift deductions and child care, have reverted back to pre-pandemic amounts.

Back in 2020, Congress introduced a new incentive to encourage charitable giving. Taxpayers could claim up to $300 for cash donations (or $600 for married couples filing together), even if they didn’t itemize — but this provision wasn’t extended for 2022.

And families with children will see their child tax credit shrink, since it’s reverting back to the pre-pandemic level of $2,000 per child. In 2021, the credit was as high as $3,600 per child.

Which means the days of supersized refunds are over. To make matters worse, those smaller refunds may take longer to arrive in your bank account.

To continue reading, please go to the original article here:

https://moneywise.com/taxes/irs-warns-2023-tax-refunds-will-be-smaller?utm_source=email&utm_medium=mwd&utm_campaign=mon_mwd&utm_term=mon_mwd_3_7&utm_content=mon_mwd_24403

Understand This and Dodge Losses During the Next Paris Hilton Ape NFT Frenzy

Understand This and Dodge Losses During the Next Paris Hilton Ape NFT Frenzy

Notes From The Field By Simon Black

[Editor’s note: Today’s missive is by Karl B, a former investment banker. Karl is now the new editor and publisher of The 4th Pillar investment newsletter. To read more about The 4th Pillar, you can click here.]

Bernard Baruch, one of the wealthiest financiers on Wall Street, said after the 1929 stock market crash:

“Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day’s financial news as he worked with rag and polish. An old beggar who regularly patrolled the street in front of my office now gave me [stock] tips. . .”

It’s foolish to believe that someone’s profession – or lack of one – and their level of financial sophistication will always go hand-in-hand.

There are plenty of astute janitors. And there are plenty of idiot fund managers.

Throughout my career, I’ve encountered both types.

But when the pattern is crystal clear… when everyone is seemingly on the same side of the market, then it’s time to hit pause. And not to walk away, but to RUN, from popular and overbought (i.e. overpriced) assets.

If you’re paying attention, then you’ll see these similar patterns replay over and over.

For example, back on 24 January 2022, hotel heiress and socialite Paris Hilton appeared on The Tonight Show Starring Jimmy Fallon.

Five months earlier, Hilton had been named number 7 on Fortune’s NFTy50 – a ranking of the most influential builders, creatives and influencers in the non-fungible token (NFT) space.

(NFTs are one-of-a-kind digital assets that exist most commonly on the Ethereum blockchain; like cryptocurrency, the blockchain tracks who’s holding the NFT.)

On this January 2022 appearance, Fallon lauded Hilton’s NFT bonafides to the audience. And then he proudly exclaimed, “I jumped in [to NFTs]... you taught me what’s up, and I bought an ape.”

Fallon was referring to his recently purchased Bored Ape Yacht Club NFT.

He didn’t know it at the time, but the floor was about to fall out from under the crypto universe, including NFTs. Fallon would become the so-called bag holder – one of the last buyers in the cycle who’s left holding onto a depreciating asset.

And the market carnage wouldn’t be limited to cryptos…

By the time that Paris Hilton went NFT ape crazy on The Tonight Show, stock markets were already headed down. The S&P 500 had topped out on 3 January 2022. The Dow Jones had peaked on 6 January 2022.

The blow-off top speculation was stopped dead in its tracks… and that caused big losses for some.

But not for all investors.

Astute investors knew then that when it comes to financial markets, external circumstances will never remain the same. That an understanding of investor psychology is key.

You’ll see the predictable market pattern:

Euphoria – the highest level of financial risk (e.g. Hilton’s Tonight Show appearance)

Gives way to anxiety…

Which leads to denial…

Which ushers in fear…

Which produces despair…

And then panic…

And ultimately results in capitulation.

And after markets bottom out, there’s a host of emotions on the upside – ranging from hope all the way back to euphoria. Then, the cycle restarts.

Again, we see these patterns in financial markets – whether that market is cryptocurrencies, tech stocks, commodities, etc.

No matter the market, if you can master investor psychology, you can consistently book profits and avoid losses.

Over a decade-plus long career in investment banking, I helped my bank’s clients to be on the right side of the investment cycle.

And now, as the newly minted editor and publisher of Sovereign Research’s monthly investment newsletter, The 4th Pillar, I’m putting those skills to use for individual investors’ benefit.

We’re in a difficult investing environment – perhaps one of the most challenging ever in our lifetimes. We’re undergoing a fundamental global restructuring. Energy, economies, even entire societies are in decline.

All these factors have major repercussions in terms of the companies and sectors you might wish to invest in.

In The 4th Pillar, we dive into promising sectors and fold in historical patterns that shape our perspective. We cover balance sheets, fundamentals and valuations. And I’m consulting with my deep network of experts who know every aspect of the sector.

In short, I’m providing an answer to your burning question: At times like these, where can the rational, cautious investor safely invest capital?

Fortunately, there are still pockets where you can make money.

You just need to:

Be extremely disciplined – with both your capital and time horizon;

And know where to look.

But let’s be clear: This type of investing is not for everyone.

If you’re content to follow the herd…

If you lack the patience to wait for your stock prices to increase…

If you’re constantly checking the value of your portfolio on your phone…

Then you’re probably not cut out for this type of investing strategy. We’ll save you some time. You can close this email, and you can ignore this week’s remaining emails.

But if you have a long-term investment horizon, then the risk is minimal, and the rewards are potentially unlimited.

We know that it’s your vision, discipline, and hard work that will reap the rewards. And we are confident that you will build something lasting for years to come – something with real value.

Click below to peer over my shoulder, discover how you can invest in real value and create true long-lasting wealth. LINK

Master Long-Term, Global Investing With The 4th Pillar

Good Investing,  Karl B, Editor  The 4th Pillar

Types of Banks: Which Is Right for Your Needs?

Types of Banks: Which Is Right for Your Needs?

There are many different types of banks, all of which have different target customers and perform different functions. But what exactly are the differences?

Jacquelyn White Mar 6, 2023

Though they dictate a large portion of our financial lives, many people don't know the difference between the many different types of banks. Discover what each bank does and how you can choose the right one for your needs.

What Is a Bank?

It may seem simple, but it's a question people don't ask enough. Banks play a huge role in our lives, so it's important to fully understand what they are. At a high level, banks are financial institutions that are certified to receive deposits of money and provide loans that allow people to borrow money. However, many banks offer other services as well, including financial advising and currency exchange services.

Some banks only serve a specific set of people, while many others serve the general public. Other types of banks, such as a central bank, serve as regulatory bodies for national governments.

Types of Banks

There are many different types of banks in the world and each serves its own special purpose. Knowing the kinds of banks at your disposal is important for making financial decisions, whether you are hoping to open a savings account or take out a loan:

Retail Banks

The majority of people are most familiar with retail banks, as they are aimed primarily at consumers. Typically, consumers will use their local branch for everyday banking and other financial services. These local branches connect to a larger bank that services commercial customers.

Aside from having basic banking services, retail banks usually provide financial advice and can offer personal loans and mortgages. Unlike commercial banks, retail banks only service consumers and do not provide loans for large businesses or corporations.

Commercial Banks

Commercial banks primarily serve individuals and small businesses. Typically, they will offer similar services as a retail bank: The ability to open checking and savings accounts, provide small business loans, and offer other financial products. These types of banks are able to provide loans using all of the deposits funneled into individual accounts.

 To continue reading, please go to the original article here:

https://www.thestreet.com/personal-finance/types-of-banks-14934713

How It All Works (A Few Short Stories)

How It All Works (A Few Short Stories)  MH

FEB 22, 2023  by Morgan Housel@morganhousel

Afew short stories whose lessons apply to many things:

Author R.L. Stine is one of the bestselling authors of all time. His Goosebumps series of scary kids books have sold over 400 million copies.  But horror wasn’t his first act. Stine spent the first two decades of his career writing kids’ joke books.  Scaring people, he discovered, is easier than making them laugh.

“Everyone has a different sense of humor, but we all have the same fears,” he said. “Kids are all afraid of the dark, afraid of being lost, afraid of being in a new place. Those fears never change.”

Everyone has different tastes, but emotions – especially fear and greed – tend to be universal.

Physical attractiveness is something everybody intuitively understands but struggles to put into words. What makes an attractive face? It’s hard to describe. You just know one when you see one.

Several studies have tried to crack the code, the most fascinating of which I think is the idea that average faces tend to be the most appealing.

Take 1,000 people and have a software program generate the average of their faces – an artificial face with the average cheekbone height, average distance between eyes, average lip fullness, etc. That image, across cultures, tends to be the one people are most likely to judge as the most attractive.

One evolutionary explanation is that non-average characteristics have the potential to be above-average risks to reproduction. They may or may not actually impact reproductive fitness, but it’s almost like nature says, “Why take a chance? Go for the average.”

People love familiarity. That’s true not just for faces but products, careers, and styles. It’s almost like nature’s risk-management system.

William Vanderbilt was one the richest heirs to ever live. But hold your envy – his life was hardly a joy.

Just before he died in 1920, Vanderbilt told the New York Times, “My life was never destined to be quite happy. Inherited wealth is a real handicap to happiness. It is as a death to ambition as cocaine is to morality.”

The interesting thing is that the other end of the spectrum – an overdose of ambition – may be just as miserable.

A half-century before, Mark Twain wrote to William Vanderbilt’s grandfather, Cornelius Vanderbilt:

How I pity you, and this is honest. You are an old man, and ought to have some rest, and yet you have to struggle, and deny yourself, and rob yourself restful sleep and peace of mind, because you need money so badly. I always feel for a man who is so poverty ridden as you.

Don’t misunderstand me, Vanderbilt, I know you have $70 million. But then you know and I know, that it isn’t what a man has that constitutes wealth. No – it is to be satisfied with what one has; that is wealth.

To continue reading, please go to the original article here:

https://collabfund.com/blog/how-it-all-works/   

Choosing a Life Insurance Beneficiary: What You Need to Know

Choosing a Life Insurance Beneficiary: What You Need to Know

Mutual of Omaha

Choosing one or more beneficiaries is an important step in purchasing a life insurance policy. After all, your beneficiary is probably the reason you have life insurance in the first place.

“Often, the reason to buy life insurance is if you have people that are dependent on your income stream,” explains Sheryl L. Rowling, CPA/PFS and head of Rebalancing Solutions at Morningstar. Other key reasons are to cover your final expenses or leave a gift to a charity or other organization.

If you are thinking about purchasing a life insurance policy, here are some things to think about when choosing your beneficiary.

What is a life insurance beneficiary?

Your life insurance beneficiary is the person or organization that receives the death benefit from your policy.

Almost anyone can be a life insurance beneficiary. Some typical examples of life insurance beneficiaries include:

A person, such as your spouse or a relative

Multiple people, including your children

A trust

Your estate

A charitable organization

A legal entity, like your company

You may have more than one beneficiary, allocated either by dollar amount or percentage of the policy benefit; you may even have contingent beneficiaries, to whom the benefit proceeds cascade in the event that your primary beneficiary dies before you.

Remember that It’s okay to change your mind. As long as you’re still living, you can always change your beneficiary. As your personal life changes, as your family grows, and as your needs evolve, you can change your beneficiary at any time.

Questions to consider

To continue reading, please go to the original article here:

https://www.mutualofomaha.com/advice/understand-how-life-insurance-works/choosing-a-life-insurance-beneficiary-what-you-need-to-know

After the Death of a Loved One, Some Decisions Can — and Should — Wait

After the Death of a Loved One, Some Decisions Can — and Should — Wait

Mutual of Omaha

Losing a loved one can be heart-wrenching. But couple that with handling funeral arrangements and personal affairs, and it can be overwhelming.

“When you’ve lost a spouse or partner, it affects every part of your day-to-day life,” says Peter Lichtenberg, director of the Institute of Gerontology at Wayne State University in Detroit. “It’s such a reorganization of who you are. It’s like taking things and shaking them up.”

Lichtenberg should know. He has been widowed twice.

Following the death of a loved one, Lichtenberg says, people feel pressured: “Everything just got shaken up, and now they feel pressure to reorganize their life and put it back together.” It takes time for the surviving party to get reorganized, Lichtenberg says, adding, “There’s a vulnerability that comes with that.”

In the midst of grief, it’s essential to take your time and seek second and third opinions regarding major decisions, especially financial decisions. “If you rush, you are really vulnerable and you’re not thinking clearly,” Lichtenberg says. “You can get yourself into some predicaments.”

Here’s a quick guide to decisions you need to make right away after the death of a loved one, and what can — and should — wait until you’ve worked through some of the grief.

Decisions you’ll need to make quickly

Arrange for organ donation. If your loved one wanted to donate organs, or make a whole body donation, let hospital staff know immediately. Organ donation is time-sensitive.

Secure property. Lock your loved one’s home and vehicles. If you’re the appointed executor for the estate, consider changing the locks on the home, especially if several people might have keys.

Arrange the next steps for your loved one. Unless your loved one made prearranged plans, you might consider:

To continue reading, please go to the original article here: LINK

5 Financial Mistakes To Avoid in 2023 (and Beyond)

5 Financial Mistakes To Avoid in 2023 (and Beyond)

Heather Taylor   Thu, March 2, 2023

The most financially savvy person isn’t immune to making money mistakes, and this is OK. Sometimes it can be helpful to check up on where you stand financially to ensure you’re not accidentally overspending on something you don’t need or putting off any financial commitments with deadlines.

Review some of these most common money mistakes and, if necessary, make the appropriate adjustments.

Sticking to Outdated Financial Goals

Most individuals set financial goals when they first start a budget and work carefully to reach these goals accordingly.

Take a moment to check in with your financial goals. Did you recently meet any of these goals, such as paying off credit card debt? Are any of your financial goals no longer relevant to you and your needs? Review the financial goals you have right now. Re-determine the priority of each goal. If you find some are no longer relevant or you already met these goals, make a note to set new financial goals to align with your life changes.

Delaying Maxing Out Your Retirement Account

Do you have a traditional or Roth IRA retirement account? There’s still time to max out your account contributions in 2022. Anyone younger than 50 may contribute up to $6,000 to their account for the year. Those over age 50 may add an extra $1,000 each year as part of their catch-up contributions.

While it’s not a financial requirement to max out your retirement account each year, it is highly recommended you do so if you are able to afford it. This is also true of any employer-sponsored retirement plans you may be participating in at your workplace. Maxing out these accounts allows your investments, and any potential earnings, to grow on a tax-deferred basis.

Not Reviewing Credit Card Statements

To continue reading, please go to the original article here:

https://news.yahoo.com/5-most-common-money-mistakes-190015067.html

How Crazy Is This? No One Wants To Own the World’s Best Performing Industry

How Crazy Is This? No One Wants To Own the World’s Best Performing Industry

March 1, 2023  Simon Black, Founder  Sovereign Research & Advisory

Benny Grossbaum was the embodiment of the American Dream.

Born in London in 1894 during the reign of Queen Victoria, Benny and his family moved to New York City (through Ellis Island) when he was still a baby.

At first the family was well off; his father ran a successful business, and they lived in a posh brownstone on Fifth Avenue in Manhattan.

But Benny was just 9 years old when his father suddenly passed away from pneumonia, and the family lost everything. The rest of his childhood was spent in abject poverty, and he later referred to this time of adversity as “the years that formed my character.”

Living in squalor also lit a fire within Benny to become wealthy; he developed a passion for money... and for study. And from the time he entered kindergarten, Benny’s teachers recognized his strong intellect and work ethic.

Benny Grossbaum flew through school. He was so advanced that he skipped several grades, all while mastering Latin and Greek. And he ultimately graduated from an Ivy League university where he studied mathematics.

This was a time, however, of significant anti-German and anti-Jewish sentiment in America. So the Grossbaum family formally changed its name… and henceforth Benny Grossbaum became known as Benjamin Graham.

You probably know that name well; Graham was a legendary investor who is considered the “father of value investing”. And during his career he taught Warren Buffett, Sir John Templeton, and a host of other prominent investors.

But Graham’s track record was far from flawless.

In 1926 as a young, 30-year old Wall Street hot shot, Graham started his own hedge fund called the Graham Joint Account.

Graham’s fund performed really well for the next few years, returning an average 25.7% per year. Not bad.

But this was the Roaring Twenties-- a period of time in the United States were the economy was red hot and the stock market was booming… thanks in large part to the Federal Reserve’s rapid expansion of the money supply.

The Dow Jones Industrial Average rose 2.5x in a roughly three-year period from 1926-1929, and Graham rode that wave.

But even someone as smart as Graham didn’t see the crash coming. In late October 1929, his fund almost got wiped out when the market had its worst decline in history.

The stock market continued to tumble for the next three years, finally bottoming out in 1932; at that point Graham’s fund was down 70%, and he knew he needed to reassess his strategy.

It was from this reassessment… out of his personal failures of the 1929 crash… that modern value investing was born.

Value investing is conceptually very simple. It means we’re looking for a bargain… and we buy assets that are underpriced.

Most people do this every day of their lives. When we go shopping at the grocery store, or browse the Internet looking for discounts, we’re always trying to find a good deal.

In this way, value investors are little different than bargain hunters who research where they can get the best deal on a new pair of shoes.

But it’s been very difficult to be a value investor for most of the last decade; the vast majority of assets in nearly every advanced economy around the world-- stocks, bonds, real estate, etc. were all selling at irrationally high prices.

A lot of investments were priced at absurd levels; even junk bonds sold at record high prices. The sovereign bonds of insolvent European nations traded at NEGATIVE yields. And money losing businesses with no hope (and no plan) to ever turn a profit traded at record high valuations.

It was really, really hard to find a great deal in the midst of all that chaos.

But market conditions have now changed dramatically, and there are plenty of great deals out there.

I’m particularly drawn to ‘real assets’ and businesses in real asset sectors-- particularly mining companies, energy companies, agriculture companies, and companies that develop productive technology.

Real assets tend to be a great way to hedge inflation… and as I’ve written before in previous letters, I believe inflation is here to stay.

What’s incredible is that there are so many ‘real asset’ businesses that are available at extreme discounts right now… which sounds perfect. And yet very few people are buying.

Energy companies are a great example.

There are profitable, well-managed natural gas businesses right now that are selling for as little as TWO times earnings (i.e. a P/E ratio of TWO).

Bear in mind that natural gas prices in the US are only $2.70 right now… and there’s a STRONG case to be made that prices will rise substantially in the future thanks to the new Liquefied Natural Gas (LNG) export boom.

For decades, the United States barely exported any of its natural gas abroad, due in large part to the difficulties in transporting gas across oceans.

But now that LNG transport has been perfected and new LNG export terminals are being built in the US, it’s very likely that more and more US natural gas will be shipped overseas to Europe and Asia (where prices are MUCH higher).

This trend would leave less natural gas in the US… and most likely lead to higher prices… and even higher profits for natural gas companies.

And yet it’s possible to buy shares in their companies right now for just 2x earnings. That’s cheap. That’s value.

It’s not just natural gas companies; plenty of mid-size oil production companies are also selling for ultra-cheap valuations.

It really is amazing that oil companies had their most profitable year EVER in 2022. Yet nobody wants to own them.

And the reason is simple: it’s apparently evil and immoral now to own oil and natural gas companies. Fund managers (under pressure from the woke elite) have sold off their oil and gas stocks because they’re all terrified of Greta Thunberg.

Other ‘real asset’ sectors are also cheap. There are even some fertilizer companies and agriculture businesses trading for low, single-digit multiples to their current/future cash flow, and price/book ratios below 1.

Value investors have been waiting patiently for more than a decade for great bargains to emerge. And, finally, there are some high quality, well managed businesses out there that can be acquired at a steep discount.

To your freedom,  Simon Black, Founder  Sovereign Research & Advisory

P.S. Karl B, the new editor and publisher of The 4th Pillar, has already featured two such promising companies in the January and February 2023 issues. Karl has found unique ways to gain exposure to the gold industry's upside... but without nearly the same level of risk as mining companies. For more about the opportunities that Karl is regularly uncovering for The 4th Pillar readers, you can click here.

https://www.sovereignman.com/investing/how-crazy-is-this-no-one-wants-to-own-the-worlds-best-performing-industry-146122/

Here’s How You Can Double Your Money Using the Rule of 72

Here’s How You Can Double Your Money Using the Rule of 72

David Nadelle   Wed, March 1, 2023

For the climate-conscious, a marker of 72 may be good enough when you’re setting the thermostat. But when it comes to measuring money, the financially aware use lucky number 72 principally to calculate how long it will take to double their investments.

The Rule of 72 is a simple financial planning tool that can be used to calculate how fast your money will double at a given rate of return involving compound interest. Per SmartAsset, the mathematical equation is: 72 ÷ your compound annual interest rate = how many years until your investment doubles.

For example, using an annual interest rate of 8%, your dividend will double in 9 years. Conversely, if you want to know what interest rate you will need to achieve your goal of doubling your investment, reverse the equation and divide your desired number of years from 72 (72 ÷ 4 years = 18% required annual interest rate).

Rule of 72 Has Been Around Since the 1400s

According to Wealthsimple’s Dennis Hammer, the Rule of 72 has been around for centuries. Hammer cited Italian mathematician Luca Pacioli as first referencing it in a 1494 text titled “Summary of Arithmetic, Geometry, Proportions, and Proportionality.”

“In wanting to know of any capital, at a given yearly percentage, in how many years it will double adding the interest to the capital, keep as a rule [the number] 72 in mind, which you will always divide by the interest, and what results, in that many years it will be doubled,” wrote Pacioli. “Example: When the interest is 6 percent per year, I say that one divides 72 by 6; 12 results, and in 12 years the capital will be doubled.”

To continue reading, please go to the original article here:

https://news.yahoo.com/72-magic-number-money-why-161944103.html