RULE 80
Know when to let go of investments
I have my own little calculation which I am happy to pass on to you. I learned it from an Internet site a while back and it has stood me in good stead. Basically for an investment to work for me means I am generally looking for a return that will double my money in five years. In a recession I might extend that to, maybe, seven years – of course the higher/faster the return, the higher the risk.
The calculation I use is to divide the interest rate into 72 to find out how long it will take me to double my money. For example, if the interest rate on a particular investment is 6 per cent, then it will take me 12 years (72 ÷ 6 = 12) to double my money. Too long for me. So I would be looking for an interest ...
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