One of the most powerful forces in the universe for wealth creation is compound interest.

The rule of 72 is a tool you can use to easy estimate the number of years it will take for your money to double if you are compounding your money at a certain rate each year.

Take for example a 4% rate of return. If you divide that into 72, you will get 18. That means if you are getting 4% on your money each year, in 18 years the money will double.

Now if you could get say…12% you would double your money every 6 years. And the results are exponential, which I’ll show you in just a second.

But first, the rule of 72 can work for you…but also against you.

It works against you when we’re talking about inflation.

Government statistics say inflation is about 2-3%. Most people with an ounce of common sense know that’s not true. In fact, all you have to do is look at the way the government used to calculate inflation back in 1980 and see how they’ve changed it to realize, they exclude key items to make the numbers suit themselves.

Some experts show that if you factored inflation they same way they did in 1980, we would be closer to 10%.

I’ll write another article in this series on inflation to address that specifically but lets just look at what inflation does to your wealth.

If you were 47 years old living off 100,000 per year, and inflation was 4%, 18 years later you reach retirement age of 65.

The rule of 72 states that your money doubles or in this case, gets cut in half every 18 years at 4%, because of inflation.

So now your 100,000 at age 47 is really like living off $50,000 at age 65.

Bad news huh?

Well it doesn’t stop there.

Are you going to live past age 65? I hope so.. Many people are living well into their 80’s and sometimes 90’s.

Lets say you live to age 83. That’s another 18 years, and now that 100k you were living off at age 47, is really worth 25,000.

How comfortable would you be living off $25,000 right now?

That’s why inflation is one of the enemies of wealth. The other 3 are Taxes, Market Loss and Interest.

It is critical that we win the inflation battle to create financial security.

How do we do that?

You get your money to compound for you at a rate of return that is higher than the rate of inflation.

Take a 30 year old who invests 10,000 at 4%.

In 18 years that money at age 48 is now 20,000.

In another 18 years you are now 65 and the money has doubled again to $40,000.

Not great, but you would be hopefully keeping up with inflation.

What happens if you were to increase your rate of return by 4% to 8%.

Now, using the rule of 72, your money is doubling every 9 years, instead of 18.

Lets look at what that does…you might think it would double your money, since you doubled the rate of return.

You would be wrong.

If you start with 10,000 at age 30, your money doubles to $20,000 by age 39. Then at 48 you have $40,000, 57 you have $80,000 and 66 you have $160,000.

$160,000, that’s 4 times more than you would have at 4%!

A minor increase, just 4% in the interest rate you earn, quadrupled the money you made.

This is the power of the rule of 72 and compound interest.

And this is why it’s so important to get a decent rate of return safely. Letting your money sit in accounts where you get paid little to know interest is like going backwards 4% per year!

Using Safe Money Millionaire strategies you can safely grow your money and get a good rate of return.

To Freedom, Prosperity and Independence,
Brett Kitchen

Becoming your own banker really requires a shift in mind set. We’ve been programmed for so long with how things work that it takes awhile sometimes to reprogram ourselves to truly think like a banker would. The first time you hear about a 101 Plan, you’d probably start thinking about how you are going to use your Plan after capitalizing it.

For most people, that starts with paying off high interest credit cards or even car loans, but after diligently practicing the concept for some time you maybe begin to notice that the cash values in your policy will increase over time and at some point you may not have any more personal debt to finance, this is a wonderful feeling and perfect time to really start thinking like a banker would.

You see, in order to make money, banks and finance company must first have capital then they lend that capital to somebody else who needs it, for a fee. When the cash value in your policies begins to increase beyond your own needs, you can follow the lead of the finance companies by lending it out to others, for a fee.

For example, assume you were a dentist that wanted to purchase a new piece of equipment that cost $100,000, how would you pay for it? If you’re like most of the dentist who aren’t trained to think like a banker, you likely end up leasing that equipment. The leasing company would buy and own the equipment then lease it to you. Your monthly leased payments will be structured so you would end up paying back the original purchase price of the equipment plus some profits for the leasing company for letting you use their money to purchase that equipment. Depending on how the lease is structured, you would either own the equipment at the end of the lease period, or you could buy it at some agreed upon price. If you ever failed to make your lease payments, the leasing company could take back the equipment and lease it to another dentist.

With sufficient capital in your policy, you could actually start your own leasing company and began purchasing and leasing equipment to your own business or to other business owners. Remember, as the owner of your permanent life insurance policy, you have the contractual right to use your cash value for anything you want or whenever you want. This means you can buy equipment and lease it out to any business in any industry you want, whether it’s: x-ray machines for doctors, backhoes for builders, trucks for trucking companies, micro-loans to start up entrepreneur, like your children, or anything else. The key is to make sure that you personally are the owner of the policy, not the corporation who will be leasing the equipment from you, even if you are the sole owner of the corporation.

You will personally then purchase the equipment and lease it to the corporation ensuring to charge a high enough lease payment to cover the cost of the equipment. If you’re the owner of the corporation, who’s leasing the equipment, you can receive an interest deduction for the policy loans you took out to purchase the equipment. Since the loans are for a business purpose, plus you can depreciate the trucks over the reasonable time, if you structure the lease properly, you should definitely meet with the qualified professional to help you structure the lease agreements properly, develop any necessary amortization schedules, determine whether you should be adding more policies to help you establish separate entities, should that be necessary. Ultimately, with everything properly structured, you can make a very good living during retirement by just leasing out equipment to businesses.

By controlling the banking process, you’ll soon be in a position to stop supporting the employees and share holders of banks and finance companies through all the interest you’re paying to them and instead use that money to support you and your family, becoming your own banker will prove to be one of the wisest decisions of your life time. Contact a True Financial Age Advisor to learn more about this powerful concept.