Let’s Start Investing

When you invest, there are two options: periodic investment, or one-time investment. Both give the same investment value. You just have to make a decision according to your financial strength.

Periodic Investment

When you invest periodically, then this means that you invest regularly. You can make the investment once a year, six months, or even once a month. There are some people that do investment at any one or two weeks. But the important here is the meaning of periodic investment that the periodic investing is routine.

Usually, periodic investing is the most effective way to pursue the target of future funds. You do not need to have a large amount of funds at this time, but you can simply set aside only a small part of your revenue for invested in an investment product. In a long run, you will have the balance of the investment so large, because you also get the interest.

Periodic investment is the same as a craftsman who is making the building wall. What he did was take a brick, with polish it with cement, then attach it. Take a brick again, give cement, and attach it on the left or right before the previous brick. So on until he can complete a layer. After that, he will continue with the second layer. When the second layer is complete, he proceed with the third layer. And so on.

Later, you will see a wall. The description is exactly as it is when you invest periodically. The only difference is, by investing you also get the interest. While the carpenters do not get ‘interest’. What he do is put aside as savings to the course regularly. But the principle is the same: a little bit, will be the hill.

One-time Investment

You also can invest only once (lump sum). This means, you can simply enter the money only once in an investment product. Deposits, say it, for ten years. Each year, you will get an interest rate that can be added to the principal. Then re-deposit it, so that the interest rates the longer the greater. But, as long as you never touch, up to ten years. After ten years, you will have a very large amount of funds.

Investing a lump sum is just like climbing to a mountain snow. From the top, you take a set of snow with your hands, and formed into a ball. After that, you release the ball from the top, to roll it down. What happened? In the way from top to bottom, the ball was the longer will be the greater. And the ball growth is exactly as geometrical progression:
1, 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024, 2048, 4096, and so on.
Well, it is the description when you do a lump sum investment.

Use Law 72

When will your investment grow two times bigger? If you invest only once, then there will be a time when your investment will be two times bigger. For example, when you invest 1 million in deposits that provide the interest rate 12% per year (rolled-over every year), the 1 million will be two times bigger in six years.

The way to calculate it is by using the “Law 72″. Divide the number 72 by the interest rates (eg 12%) of the product of your investment. For example: (72/12) x 1 year = 6 years.

That is period of time it takes for your investment to be two times bigger.

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