Are you familiar with the Rule of 72? It’s a shorthand way of calculating how long it will take for your money to double. Take an interest rate—say, 7 percent. Divide 7 into 72, and that’s a little over 10. That means it will take a little over 10 years for your money to double at a 7 percent rate of interest.
Many of you know Warren Buffett, the billionaire head of Berkshire Hathaway (aka the Oracle of Omaha). Everyone from novices to professional investors heed Buffet’s wisdom because he’s got a great, folksy way of simplifying all the noise we get about the markets and successful investing. What you may not know is that Buffet wasn’t the first to use this approach.
Have you heard this joke before? How many central bank economists does it take to screw in a light bulb? Just one. He holds the light bulb while the entire earth revolves around him. All kidding aside, we’re at that time of year when we’re reading one economic forecast after another, and quite frankly, it’s like the proverbial chimpanzee throwing darts at a dart board.
Remember the 1960s TV show “Sing Along With Mitch”? It featured an animated bouncing ball over the lyrics on the screen with a chorus singing in the background. As a kid, I sometimes found that show confusing. The same thing can happen in managing your investment portfolio. Sometimes investors come in to see us with a portfolio that’s been bouncing all over the investment universe. They’ve been chasing one hot investment after another—usually arriving too late to the party. After all that time, stress and effort, they have disappointing returns and a really dysfunctional portfolio.
As many of you know, the Federal Reserve Board recently agreed to taper its bond-buying economic stimulus program. It’s something we’ve been expecting—some would say dreading–for a long time. It means the Fed thinks the economy’s recovered to the point that it can move forward on its own. That’s great for business and job seekers, but what does it mean for you and I as investors? Rising interest rates.
Markets keep changing. Here’s how to stay in the stay-rich game and hold on to your assets in any market cycle. Key Takeaways Wealth preservation
Many people ask me, “What’s the definition of rich?” I’ve heard everything from having a half million dollars, which sounds pretty low to having over $10 million dollars, which sounds kind of high. It’s a really wide range and there’s no precise definition of what it is to be rich.
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