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In the world of personal finance, there are a few powerful concepts that can help individuals make informed decisions and achieve financial freedom. Two of these concepts that go hand in hand are the Rule of 72 and compound interest. Understanding these concepts can empower you to make smarter investment choices and grow your wealth over time.

In this article, we will explore the Rule of 72, explaining what it is and how it works, as well as delving into the wonders of compound interest and its impact on your financial journey. By the end, you’ll have a clear understanding of how these concepts intersect and how they can be leveraged to reach your long-term financial goals.

I. What is the Rule of 72?

The Rule of 72 is a simple mathematical formula that allows individuals to estimate the time required for an investment to double in value, based on the rate of return. It serves as a quick and easy mental calculation tool that can provide an approximate timeframe for investments to grow.

The formula is straightforward: Dividing 72 by the annual interest rate gives you the estimated number of years it will take for an investment to double. For example, if you’re earning an 8% annual return on your investment, dividing 72 by 8 will estimate that your investment will double in approximately 9 years.

This rule acts as a rough guideline and can be utilized for various investment scenarios. Whether you’re considering the doubling time for a stock holding, a mutual fund investment, or even the growth of your retirement savings, the Rule of 72 can offer a quick estimate of the potential growth timeline.

II. The Power of Compound Interest

Compound interest is often referred to as the “eighth wonder of the world” by financial experts. It is a concept that allows your money to work for you and multiply over time.

Unlike simple interest, which is calculated solely on the principal amount, compound interest takes into account both the principal and the accumulated interest, resulting in exponential growth.

To understand compound interest in action, let’s consider an example. Suppose you invest $10,000 at an annual interest rate of 5%. After one year, your investment would grow to $10,500, with a $500 interest gain. The following year, your interest is calculated on the new amount of $10,500, resulting in a total of $11,025. This compounding effect continues year after year, maximizing your returns.

The beauty of compound interest lies in its ability to accelerate the growth of your investments over time. The longer your money is invested, the more significant the impact of compound interest becomes. By starting early and allowing your investments to grow for longer periods, you can harness the true power of compound interest, significantly multiplying your wealth.

III. Rule of 72 and Compound Interest: A Winning Combination

When the Rule of 72 and compound interest intersect, they provide an immensely powerful tool for investment planning and goal setting.

By combining the Rule of 72 with compound interest, you can estimate the potential growth of your investments and make informed decisions accordingly. Let’s say you want to save $100,000 for a down payment on a house, and you have a target timeframe of 15 years. By applying the Rule of 72, you can calculate the approximate annual rate of return needed to achieve this goal. Dividing 72 by 15 gives you an estimated return of 4.8% per year.

Knowing this target rate, you can then explore different investment options to identify those that can potentially meet or exceed this return. Whether it’s through stocks, bonds, real estate, or other investment avenues, leveraging the power of compound interest while adhering to the Rule of 72 can guide your investment strategy.

Additionally, understanding these principles can help you plan for retirement. By considering the Rule of 72, you can estimate the number of years it will take for your retirement savings to double, giving you a tangible time frame for your preparations. Moreover, the sooner you start saving, the more time your investments have to compound, easing the burden of saving larger amounts later in life.

Conclusion

The Rule of 72 and compound interest are crucial concepts in the world of finance, providing individuals with valuable insights into investment growth and planning. Recognizing the power of compounding and understanding how the Rule of 72 can provide quick estimates adds an additional layer of knowledge to your financial toolbox.

By applying these concepts strategically, you can make more informed investment decisions and maximize the growth of your wealth. Remember, time is your ally when it comes to compounding, so start early, stay consistent, and allow the Rule of 72 and compound interest to work their magic on your financial journey.

Personal Capital Review from an average guy with a regular job, learning how to organize his finances. When you were growing up and counting the coins in your piggy bank, you probably never envisioned the option to track your finances all in one place in just a few minutes per day.
And while counting quarters and dollars is one thing, as we age, knowing our net worth and tracking our finances becomes more essential seemingly daily. Luckily, there is an assortment
of ways to do this.
One app and financial platform that stands out amongst the rest is Personal Capital.
Personal Capital is an app that offers essential financial tracking on things like daily finances, loans, bank account statements, monthly bills, retirement contributions, and investments.
Throughout the next couple of minutes, we will go over the features that Personal Capital offers, including the app, unique tools, and even some things I’ve learned through my personal
experience with the app.
Quick Review of Personal Capital
To give you a quick rundown:
Personal Capital is famous among many finance professionals and savvy people. Personal Capital is an excellent app for beginners and seasoned investors alike. No longer do you need
to use spreadsheets, write down expenses, keep receipts, or balance checkbooks after every transaction? If linked to your bank account, the app will automatically categorize each spending. Personal Capital is an app you can download on your phone and monitor your spending and
group transactions by category. No longer do you need to keep a spreadsheet on a computer or balance your checkbook since Personal Capital does all of that for you!
The app allows you to know where your money is going. It even allows you to set monthly budget goals and track your investment returns in retirement and taxable investment accounts.
Personal Capital is an investment app that links to your portfolio accounts and monitors your investment returns, such as your 401k, IRA, HSA, IPERS, SEP, and other retirement and
taxable accounts.

Quick Pros & Cons of Personal Capital

Most users find these positives when using Personal Capital:
● The app is an excellent resource for staying motivated and on top of finances.
● Monitor your budget and expenses
● The ability to track monthly cash flow
● Track Assets vs. Liabilities and Networth
● Informative Information analysis of asset allocation and fund fees
● Easy to use, the app is easy to navigate
● Free to use, the app is free to download and has excellent value.
● Customer Service responsive to phone calls and emails and have quickly fixed any
issues I’ve had.
Some users have described these Cons with Personal Capital:
● Linking your personal accounts to the app can take time
● Some are skeptical of linking accounts
● Accounts often need refreshing and reconnecting
● Fees for Wealth Management feature
For the Wealth Management feature that Personal Capital offers, this only applies to high net
worth individuals eligible for this feature. This could be a pro for some investors, but others may
prefer traditional low-cost index funds at brokerages such as Vanguard, Fidelity, Charles
Schwab, Blackrock, etc

Full Review of Personal Capital and Features:
Let’s first look at who Personal Capital is for
Who is Personal Capital For?
People on top of their finances or actively working towards financial goals. I came across the app after hearing about it from Financial bloggers as they recommend the app for being a resource in paying down debt, tracking spending, and watching investments grow.
Personal Capital Features 8 Great Features
GRADE 10/10 A
Personal Capital has cool features for tracking investments and educational information about
fees and allows you to see your portfolio comparisons and returns vs. S&P 500, an index
commonly used to track market returns.

Here are the Personal Capital features I enjoy:

Budgeting Tool:
The Personal Capital Budgeting Tool sees where your expenses are coming from, grouped by
category Budgeting tool is useful because it allows you to make changes in spending habits. Knowing where you’re money is going can help to make cuts on unnecessary purchases to
save more money.

Cash Flow Tracker:
Similarly, the app Cash Flow Tracker, is a tool to see how much money is coming in vs. being
spent. Cashflow is useful to monitor, because the more net cash you have to go in vs. gone out, the more you’re able to invest and take advantage of opportunities. Cashflow is vital to have
bills accounted for, emergency fund, and build-up assets

Investment Returns Tracker:
An interactive feature to show how your portfolio is performing vs. common indexes such as
S&P 500, Dow Jones, or International funds. Historically the S&P 500 has returned over 7% after adjusted for inflation. This is the most common benchmark to see if your investments are
keeping pace with the market. Networth Tracker/ monitor Assets vs. Liabilities. This feature is
fun to see your network go up based on paying down debts and investments growing.

The Networth Tracker:
This is the best feature with Personal Capital (in our opinion). The net worth tracker tool
manages and monitors all of your assets and liabilities in one spot. Debts are liabilities. If you
have more debt than investments, home equity, or other values, you’d have a negative net
worth. However as you pay off debt and begin investing its fun to watch networth increase in
accounts such as 401k, Roth IRA, accounts that will receive dividends, reinvestment and compound interest.

Portfolio Analysis:
On portfolio analysis this feature lets you check your investments with Informative information
about Asset Allocation, Cash, Bonds, US Stocks, International, Alternatives Large Cap, Mid Cap, Small Cap

Fund Fees Analyzer:
The Personal Capital Fund Fees analyzer tells you what fees you are paying for your
investments, including hidden or excessive fees. The analysis also tells you how much fees
could cost you over time based on the expected 8% returns. The app has features to see the
fees of investments. I am a fan of low fee index funds like Vanguard and can see my fund has a
small fee of 0.04, which is one of the most economical cost funds.
Many mutual funds have much larger prices, which can make a significant impact on potential investment gains over long periods. As the app, many mutual funds have high costs and are not
tax-efficient.

Check ROI Tracker & Portfolio Tracker:
Monitoring your ROI with the Personal Capital portfolio tracker feature that monitors returns vs.
indexes such as S&P 500 an index fund of 500 biggest companies in US Stock market, index
funds are a favorite of young people with time to invest, Bogleheads or F.I.R.E (Financially
Independence Retire Early) community with bloggers such as Mr. Money Mustache, Grant
Sabatier and JL Collins (The Simple Path to Wealth author), (JLCollins stock series articles
written for his daughter), and other finance gurus like Ramit Sethi are big fans of index funds for low fees, historical returns beating most fund managers.
The app comes with a retirement planner, a way to monitor if you’re on pace for your retirement
goals. All of these features are fun to track, especially as you make progress paying down debts, increasing investments, and seeing your net worth increase is a satisfying feeling. I love seeing transactions when my finances get dividends, that reinvest knowing that compound
interest will build-up

Asset Allocation:
The Personal Capital Asset Allocation is an advanced feature that lets users see what sectors their investments are in based on percentages.
This allows me to diversify and add stocks and ETFs in other industries if I choose to balance portfolios in underweight areas.I enjoy this feature as I have learned about investing through
app resources. (Though the closer to retirement you get you may get less aggressive and more conservative in asset allocation, you may have more bonds or other asset classes in case of market volatility

As you can see in the Screenshots above, using the Asset Allocation feature Personal Capital provides I am able to see how my investment allocation holds up against traditional allocations,
like the S&P 500.
Additionally, I also get to see my allocations of Cash, Bonds, US Stocks, International
Stocks,and alternatives.

How the Personal Capital App helped me in 3 areas:
Paying off debt, Saving, Investing.
● I was able to monitor paying off 10,000 student loans and monitor my other expenses
over a two year period.
● I am able to track my savings for accounts such as house Downpayment
● Check retirement Accounts such as 401k, Roth IRA and other accounts such HSA and a
nonretirement account with Robinhood

The case for Personal Capital
For me, the Fun part after taking on debt and establishing a budget is saving up money and
tracking investments and watching assets increase and liabilities decrease. It can be addicting
in a positive way to encourage proper financial management.
Another favorite feature of the app compares your investments vs. S&P 500 (500 biggest US-
traded stock companies) Goes into historical returns, fund fees, and asset allocation.
In my opinion, Personal Capital is the best app because you track everything. Budget, bank
account, investments, broken down into allocation and fees. Every transaction you make
monitored. Group into categories. Does smart weighing compare your investment portfolio vs.
the S&P 500. Fun because it tracks your net worth and tells you how all your investments are
doing. Perfect for finance geeks, everything but credit score. Monitors all your assets and
liabilities. So you instantly can see your finances improving on your phone for free.
The app also has an Wealth Management option for people with higher net worth.($1 million
plus inevitable assets) The fees for this service looks to be a little under 1%
Budgeting & Fintech Apps
Mint -Mint is another similar app to track paying down debt and setting goals. I also used mint
as a way to monitor my credit.
Tiller
Robinhood – One of the investments I track on Personal Capital is Robinhood. Robinhood is an
investment app popular with Millenials.
I wrote a review of my experiences with Robinhood in a previous article.
Final Thoughts
I used personal capital to achieve financial milestones, being Debt free after paying off the last
of my student loans and begin monitoring my investment returns. Apps like Personal Capital,
Mint, nerd wallet, learn vest, credit karma, and Credit Sesame, You Need a Budget (YNAB), etc.,
are suitable for monitoring where your money is going and your credit score. Personal Capital is easy
to track all your finances all in one place. Plus has some sound financial advice in regard to
index funds/mutual funds and fees.
Based on my experiences I recommend Personal Capital for anyone interested in improving
finances or staying motivated towards goals and financial milestones. The feeling of seeing the
hard work pay off, see potentially delayed gratification down the road is fun, and can be a
competitive fun way to improve finances and celebrate small wins, and significant steps accomplishments in financial goals.

Have you heard that you need a lot of money to invest or investing is for rich people? I initially
thought that, too, as I opened up my Roth IRA with Vanguard until I had enough in the money market to transfer money into a mutual fund.
Well, thanks to apps like Robinhood, no longer do you have to have $3,000 to invest as you would with most brokerage mutual funds to invest. If only Robinhood had been around sooner, I could’ve started my financial journey much earlier. Now I will review Robinhood and my
experiences with the popular app.
What is Robinhood?
Robinhood is a popular investment app used primarily by millennial demographic to trade
stocks, EFTs, and Bonds on their phones. The app is a popular alternative for millennials that want to invest with little money or without having to buy a mutual fund through a typical a brokerage account or day traders
Changing The Industry
The app differs from other platforms as it has commissioned free trades. The app has changed
the industry and big brokerages have taken notice and cut fees and commissions on funds. They are benefiting investors across the board, as fees can cut into your investment earnings.

Pros & Cons of Robinhood:

Like any financial app or investing technology, there will be pros and cons when it comes to the
platform. For Robinhood, here are revered pros and the not so friendly cons of the platform:
Pros
● -Commission-free
● -Hands-on easy to use platform
-Exposure to International Stocks
● -Options to invest a variety of ways, stocks and risky alternatives
● -Robinhood Gold feature for extended trading
● -Partial Shares options
● -Dividend Reinvestment
● -Categories such as Top 100 stocks
● – Free stock for joining and referrals
● -Cash Management (Although currently low-interest rates in the current market)
● -Learning experience
● – *Can create passive income capital gains and dividends (Also potential for loss, due to
viotile markets No guarantees individual stock investing)
Cons
● -Delayed time on stock trades (doesn’t seem always to trade real-time, can be seconds
off from my experiences)
● -Occasionally glitches
● -Customer Service not Great
● -Had an issue with the server in March leading to lawsuits
● -Doesn’t teach how to invest
● -Isn’t as tax efficient and Roth IRA at brokerage such as Vanguard Fidelity, Charles
Schwab.
● – For inexperienced investors can be particularly risky
● -Easy to get anxious and make poor decisions
● – Waiting for funds to start trading or withdrawing after the sale. (6 trading days after the
sell of securities can you withdraw money into your bank)
● – Others in Space Webull, M1 Finance, Wealthfront, Betterment, Stash, Acorns
● – It doesn’t have to invest advice or help other apps provide.
● – It doesn’t offer tax-loss harvesting, a strategy used by other apps to sell stocks that lost
money at the end of the year that may have lost money to reduce taxes. (Typically this
would likely be done in December) Once you sell a stock, wait 30 days before you can
repurchase stock to qualify for capital loss. Otherwise, it is considered a wash sale.
Who is Robinhood for
Millennials or people interested in trading stocks. People who have money to invest or risk.
What’s cool about Investing on Robinhood?

People who have ever been interested in being Shareholders in a company that you consume products and services from, for example, if you buy the latest iPhone, maybe you’d consider
Apple stock, if you like coffee, instead of $5 latte perhaps consider Starbucks
ETFs you may decide to invest in a sector or basket of companies you have options in ETFs
A few popular ETFs include l
VOO S&P 500, VTI Total Stock Market, QQQ (100 stocks on Nasdaq including Tesla) BND
Total Bond or with your values such as social responsibility fund like ESGV that tracks stocks that do suitable for environmental and or social issues
Note-These are examples, not stock recommendations) Stocks are volatile and come with risk and I am not currently a financial Advisor or fiduciary)

How does Robinhood stack up against the competition
● Robinhood is the most popular downloaded mobile investment app.
● Stash is 2nd most popular Stash is educational for beginners and encourages more EFT trading, which usually is safer than individual stocks as far as being less volatile, and having a mix of companies to diversity. Stash, however, takes a $1 month for service, which makes the app more expensive to use than Robinhood. Stash has fractional shares and automatic weekly payments into ETFs and stocks.
● Acorns is another app suitable for beginners but are less aggressive investments, and it’s a better savings account for purchases you round up using your debit card, in theory,
helps you invest spare change.
Betterment and Wealthfront are more diversified portfolios or pies that offer help from financial professionals and Robo investing. These apps have excellent benefits. Robinhood doesn’t include pie portfolio and tax loss harvesting.
Other apps comparable to Robinhood are WeBull and M1 Finance, with a similar setup.
*Disclosure of list I have only personally used and invested with Robinhood, Stash, and Acorns
app.

Cool Things to Know About Robinhood
It’s a game-changer for investors that can now invest instead of waiting on the sidelines. People can now get into stocks, even partial shares of companies. The feature includes 100 Most
Popular Stocks held by users on the app such as FAANG Facebook, Amazon, Apple, Netflix,Google and other popular stocks such as Microsoft, Tesla Starbucks, and Disney to name blue-
chip stocks
*Not a recommendation to buy these stocks.
The app has created fresh ideas, such as cash management, cryptocurrency trading,
international stocks from around the world, options trading, and dividend reinvestment options.

Where Robinhood can improve
● Customer Service is lacking. Difficult to contact them over the phone. Buying and selling
shares may be sold at a higher or lower price than you initially went to swipe /slide for
trade. (In day trade stock that can make a massive difference on timing)
● More material to educate people to make wiser investment decisions. Robinhood app is
so easy to use, one consideration it can be addicting to watch on your phone, and may not
be best for people who like to gamble or buy and sell on impulse.
● Robinhood is still in the early years of development, and they are trying to appeal to
many types of investors and evolving and growing. However, they can find a better way
to help investors make wiser decisions. The app trades stocks, and EFTs, but doesn’t buy
mutual funds and Index funds which is an advantage of brokerages with retirement
accounts such as Vanguard and Fidelity which each offer a variety of low-cost funds that
track the market. It is tough to time market and most stock pickers even professionals
will perform underperformance the market index over ten years, (as Warren Buffett

famously won a bet with a hedge fund manager by having S&P 500 vs. hedge fund with

higher fees and more trading)

Final Thoughts
● Robinhood is a great app and game-changer for generation millennials and younger
allowing younger people to begin to take steps towards wealth accumulation sooner.
● Many people will make a lot of money on Robinhood; many others may be better with a more passive investing approach. During a bull market, you feel like a genius with stocks, bear market, or recession; you may lose a good chunk of your portfolio and
might want to sell as market bottoms out.
● Robinhood is not for the faint of heart that panics and sells at lousy news or stock trading lower. New Investors may want to practice on stock simulations or more conservative apps like Acorns or Stash you can learn.
Robinhood is a fantastic app for people that do proper research on stocks and have money to invest and can tolerate losses on the money they don’t need in the short term.
● Especially now in the current economy, stocks fluctuate significantly in the short term.
Still, in a long time, most stocks go up as, on average, historically, the market (measured
by index funds such as S&P 500 and Total Stock Market) has returned 7.2% after
inflation, even accounting for recessions. If you have the right temperament and don’t
panic, sell and buy, Robinhood may be an excellent app for you to Increase Cash Flow
with the potential for capital gains and passive income.