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Before we go there, I think the first question here really is: “Why should I even invest at all?” The underlying answer that most of us have to that question, even if we don’t say it, “That’s too risky. I know people who have lost everything doing that. I’m not that dumb, I’ll just save in a savings account.”

So the first answer to refining yourself is to ask yourself: “Do I know what the Rule Of 72 is?”so” How will this affect me?”

What Is The Rule Of 72?
The age old Rule Of 72 is hundreds of years old. The Rule Of 72 first referenced by Luca Pacioli, sometime during the 15th century. This made it possible to understand how long it will actually take for money to double. {Luca didn’t explain the rule much, meaning it possibly goes back even further than that, but the principle still holds true today}.

{Here’s an example: start with any amount of money, let’s say 0.00 to be simple. You invest it at 10%. Using the simplest of math, you take 72 and divide it by 10, and you get the number 7.2, which means your money will double to 0.00 in 7.2 years}.

{If you have 0.00 and you invest in at 7.2%, you take 72 and divide it by 7.2, and you get the number 10, which means your money will double to 0.00 in 10 years.
The same exact principle is true if you start with 0.00 or 0,000.00. That’s all the harder it is}.

Is this accurate? Well, not exactly. If you assume that in The Rule Of 72 interest compounds yearly you are happy, how would you feel if it compounds monthly or even daily. To get a good idea here you go, there are Financial calculators that are very accurate.

How will this affect me, anyway?
Let’s figure you really are thinking like our fictitious person at the beginning of this article, and you already know it is better than to invest in the stock market, so you just leave some money every month into a savings account. Is it enough that you save doesn’t that make you feel comfortable knowing that some don’t save at all?

Follow me if you will.
So you’re in a savings account which, in the market today, most likely pays you somewhere between 0.2% if you’re like most people and maybe 3%, if you’ve got a lot of assets and your mortgage there, too. If you are part of the second group and you are earning 3%, you would take 72 divided by 3, you would get….to have your money double in 24 years. Ouch! I think you could do much better.

If you’re in the former group and earning 0.2%, well, you’re looking at having your money still double all right, and in only 3,600 years! It is this easy?

Please understand that 3% CD’s are great but when you think about the fact that with inflation at zero your money will not double for 24 years. Inflation for the last 200 years in the USA has averaged 3%, currently it is nowhere close to that. That means a 3% return is roughly equal to no return at all, most of the time.

What does this have to do with educating yourself about the stock market? This is the answer why you should be involved in the first place. Being involved and having an advisor to help you stay ahead of the game will keep your goals in perspective and help you support yourself and your family with a lot less stress.