The Rule of 72

Have you ever wondered how long it takes to double your money? There is a simple formula to calculate how many years you will need to double your money.

The simple formula is called The Rule of 72. This rule only works when you compound your interest annually and do not take out money from your account. To find out how many years you need, divide 72 by your interest rate. Here is an example: Assume your interest rate is 12%, you will double your money in 6 years (72/12=6).

If you add more money monthly to your initial investment, your time to double investment will be less. Investment is a discipline and don’t expect to double your money overnight. Start investing at an early age, keep adding more money on a monthly basis, and stick to it for the long run – you will achieve your financial goals.

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Some Highlights from the Recent RBC Canadian Consumer Outlook (CCO) Index

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The RBC Canadian Consumer Outlook (CCO) Index released on Thursday, February 9, pointed out that Canadians are increasingly worried about their overall personal finance situation and it seems to be deteriorating in some aspects. The RBC CCO looks at Canadian economy, personal finance situation, and consumers expectations annually.

Let’s look at some important highlights:

- 32 percent Canadians are positive about Canadian economy (down from 42 percent last year).

- 36 percent Canadians believe that personal finance situation will improve (down from 38 percent last year).

- Personal debt stands at $11,729 on an average (down from $13,020 last year).

- 57 percent Canadians have no emergency savings fund.

- 53 percent will change timing on major purchases due to economic conditions.

- 31 percent will focus on reducing debt and spending less.

- 22 percent will focus on saving and investing more.

- 30 percent would move to another part of the country or change careers for better jobs.

- 20 percent working in a different field than they are skilled at.

The full report can be accessed here: The RBC Canadian Consumer Outlook (CCO) Index 2012. Where do you you fit in? If you are reading this article now here on Canada Personal Finance Website, it shows that you are someone who would like to build a better financial future and congratulations on that – and don’t forget to read my other personal finance website regularly.   

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Close Credit Card Accounts Before Throwing Out

4 Common Credit Card Mistakes

We all have credit card accounts here and there we are not aware of. Sometimes we just throw away credit cards once we don’t use them anymore. But is that the proper way of getting rid of those credit cards you don’t need?

For regular credit card accounts, if you just throw away or destroy your credit card your account remains active with the issuing financial institution. That means on paper you still hold that credit card and your credit account will appear on your credit report, regardless of whether you physically have that credit card or not.

For store credit card accounts, it depends on that store’s policies. Some of them will close your account if you are inactive for some time and some of them will keep it active regardless of whether you are active or not.

So if you were applying for store credit cards at different places just to get the 10 percent off on the first purchase and forgot about it after, you may have many credit cards appearing on your credit report you were not aware of – and when you apply for a new loan or mortgage the lender may not like seeing too many open credit accounts.
The best way to get rid of any credit cards is to call the issuer and close the account. Then shred it or cut it into pieces and trash them separately in separate garbage bags.

So next time, pick up the phone and close your account first before getting rid of those cards you don’t need. 

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