There are three reasons to think Microsoft's 15-year streak of dividend hikes is just getting started.When mapping out compound growth scenarios, one trick to use is the "Rule of 72." To see how long it takes an amount to double at a fixed growth rate, divide 72 by the rate of increase for your answer. For instance, capital growing at 8% a year will double in nine years, while an investment compounding at 10% a year will double in roughly seven.The Rule of 72 is imprecise, but it gets you close. Even if the ...

The Rule of 72 helps an investor calculate how long it will take for an investment to double given a fixed annual rate of interest. Here's how to use it. https://t.co/BBOzxsaQ2j ...

Group 1 - More Americans are transferring funds from checking and savings accounts into brokerage accounts, money market funds, and CDs to seek higher returns as inflation remains a concern [1] - Total cash reserves in the U.S. have been rising since mid-2024, indicating a shift towards investment for growth [1] Group 2 - Wealth managers suggest strategies for individuals in their 20s to turn $1,000 into $100,000 over time [2] - Investing in the S&P 500 or an index fund is unlikely to yield $100,000 from a $1,000 investment before retirement, with historical returns around 10% [3][4] - Compounding at 10% annually would result in approximately $73,000 after 45 years, not accounting for inflation [3] Group 3 - The Rule of 72 indicates that at a 10% return, it would take about 7.2 years for an investment to double [4] - Following this rule, it would take 47 years for a $1,000 investment to grow to $100,000, assuming no additional contributions [5]

Core Insights - Mohnish Pabrai, a notable value investor managing approximately $900 million, advocates for the Rule of 72 as a fundamental concept for investors [1][2] Investment Principles - The Rule of 72 helps investors calculate the time required for money to double based on a given interest rate, emphasizing its importance in financial education [2][3] - Pabrai illustrates that at a 7% return, money doubles in about 10 years, while at 10% and 15% returns, it doubles in roughly 7 and 5 years respectively [2] Historical Example - Pabrai uses the historical sale of Manhattan for $23 in 1623 to demonstrate the power of compound interest, suggesting that if invested at 7% annually, that amount would have grown to approximately $23 trillion over 400 years [4][5] - The example highlights that even a small initial investment can yield significant returns over a long period, reinforcing the idea that the duration of investment is crucial [6] Practical Advice for Investors - Pabrai advises investors to adhere to three key principles: spend less than earned, start investing early to maximize compounding, and focus on broad market indices instead of individual stocks [6] - He suggests using platforms like Fidelity or Robinhood to invest in the S&P 500 index as a straightforward investment strategy [7]

Core Viewpoint - The article emphasizes the importance of patience in investing, highlighting that making money requires time and a strategic approach, as illustrated by the Rule of 72 [1] Summary by Relevant Sections - The Rule of 72 is introduced as a method to estimate the time required for an investment to double, which underscores the necessity of patience in the investment process [1]