Fascinating math in trading and investing
Rule of 72
The rule of 72 is a useful rule to calculate how long it takes for a particular investment to double given a certain return: divided 72 by the annual return of the return.
- 12% return ~ 6 years
- 8% return ~9 years
- 6% return ~12 years
The mathematics of investment losses
No one wants to sell at a loss, but sometimes it is better to take a small loss, than take a devastating decline that is impossible to recover from. To get back from a 50% loss, you will require a 100% gain and from there the numbers simply get more depressing...
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