The Rule of 72

Who would have known that such a rule existed?! Why wasn't it taught to us when we were kids or high school students, or even in college? Why? Why? Why?

Even our parents don't know this! As simple as it is, it is the very one thing that totally changed my perspective on banking.

So what I am ranting at anyway? It is the Rule of 72, or the Law of Compounding Interest. As you can see in the attached image (courtesy of http://www.wolnymbyc.pl/regula-72-czyli-kiedy-z-miliona-beda-dwa/), it is as simple as:

TAKE THE NUMBER "72" and DIVIDE IT BY the INTEREST RATE at which your MONEY IS INVESTED. The resulting NUMBER or the QUOTIENT is the NUMBER OF YEARS IT WILL TAKE TO DOUBLE YOUR MONEY. 

Here in the Philippines, interest rates range from 0.875% to 1.375%. Check on more details here: http://philippines.deposits.org/. So let's say we set the average at 1%. Let's do the Rule of 72.

72 / 1 = 72 years.

Yes, 72 years! It will take 72 years for my money to double when invested in the bank. Since I am 34 now, I would be 106 years old when that happens. Wow! Good luck to me!

So, all this time, our parents have been teaching us to save money the wrong way. (And they were doing it wrongly too!) Initially as kids, we put them into piggy banks, and when we grew to legal age, we were then advised to keep our money in the bank so as to earn interest unlike when in the piggy bank.

This is one big financial practice boo boo, eh?!

So now that you know the Rule of 72, where are you taking your money? To the bank, still?