The Money Rule That Banks and Lending Institutions Don't Want You to Know About!

If you are like me and many other Americans, you were probably never taught a personal finance course in high school or college. I find this very interesting because having control of your finances is probably one of the most important skills you must have to be successful in life.

There are so many people struggling with debt and other financial issues due to their lack of knowledge...... It's pretty sad to see. One of the main reasons people end up in these situations is because they do not understand the money rule. What is the money rule you ask....well I am referring to the rule of 72.

The rule of 72 is used to determine how fast it takes for your money to double at a certain interest rate.

You take the interest you are earning on your money and divide it into 72 and that gives you the number of years it would take your money to double. For example if you were receiving 2% interest on $1000, it would take 36 years for your money to double to $2000.

I know, that's a long time isn't it. That's the problem! Where do most people keep their money...in the bank right? Well most banks pay you an average of 2% on your savings accounts and cd's right?

Let's take a deeper look at this, how many of you reading this have credit cards and loans? Probably everyone right? Well do you know how much interest you pay on your credit card? Most likely anywhere between 8-30% right? So who is the big loser in this picture? We are, if we don't know how to use the rule of 72 for us and not against us.

You see banking institutions know this rule inside out. That's why they charge you a ridiculous amount of interest to borrow money and then turn around and pay you peanuts on the same money they probably lended right back to you!

If you think about, if a bank charges you 12% for a credit card and you receive 2% on your savings. You double their money every 6 years (72 divided by 12) and your money doubles every 36 years (72 divided by 2). That's why people can take years and years to pay of a small balance on their credit cards...crazy isn't it.

So what's the solution?

You need to do what the banks do and try to earn as much interest as possible on your money!

How do you do this, well you need to take your non emergency money out of the bank and put it in a vehicle that will earn you a better interest rate!

My suggestions are Universal life insurance and annuities.

Why? Because when you put your money in these vehicles they have the potential to get as much as 12% interest and sometimes more for your money depending on the specific product you choose. In addition to that, your money grows tax deferred (unlike in a bank) so you don't get taxed every year on your gains. Also you can set these vehicles up so that you can access your money tax free also.

With annuities there are usually no administrative fees unlike when you invest in a mutual fund...this helps your money grow quicker.

There are many more advantages and if you would like to know them all, feel free to contact me. I hope you enjoyed this article.

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