Many of us are very familiar with the story: Jesus blesses the 2 fish and 5 loaves of bread, and they’re multiplied to feed thousands (John 6:1-14) It’s such an amazing story. That kind of multiplication is hard to get your arms around or envision. It’s encouraging as believers to know we’re in fellowship with the One who has that kind of power to amplify what’s good. And we’re invited to participate with Him!
At Servant Solutions, we often think about multiplication in the work we do. At various seminars and conferences we will often use the multiplication and compounding principal known as the “Rule of 72.” Heard of it? It’s an excellent rule to reference when you’re working on your financial plan and saving money for the future.
Here’s How It Works
The “Rule of 72” best applies to long-term retirement planning—the kind you do when you’re saving with a goal in mind. The goal here? To have enough money to provide a monthly paycheck in retirement when you’re no longer bringing in your typical paycheck from work.
Here’s where the rule comes in handy. It’s a really simple way to find out how long it will take for your money to double at a particular interest rate. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.
I’ll throw out an example. Let’s say you could earn an average of 10% on your investment. Dividing 10 into 72 gives you a result of 7.2. This tells us it would take 7.2 years to double your money if it earned 10% per year. Or say you could earn an average of 8%. At 8% yearly (8 divided into 72) it would take 9 years to double your money. It’s a great formula to refer to (while bearing in mind that actual investments can fluctuate in value).
For all of us at Servant Solutions, this formula is an important teaching tool. It helps motivate those in ministry, who we care about, think carefully on how much they are saving towards retirement. Now you can carry this formula into your planning as well.
Back to the story found in John 6. It’s amazing to read about Jesus’ ability to transform something small and modest into extravagant abundance for the people around him. It’s truly a privilege to serve a God who cares for needs in this way.