A friend of mine asked me recently, “How do I find lucrative deals/investments?”

That’s a trick question. Or at the very least, unclear. What is meant by the term lucrative and how can it be measured???

I think a better question is “I have X amount of money. How can I double my money in a short period of time?”

Now we are getting somewhere.

Rule of 72 (Compound Interest)

72 ÷ (interest rate compounded yearly) = # of years until money is doubled

Example:

Say you invest $100 @ 12% interest rate. How long will it take to turn into $200?

72 ÷ interest rate = 72 ÷ 12 = 6 years

Let’s look at the numbers

Year 1 = $100.00 x 1.12 = $112.00

Year 2 = $112.00 x 1.12 = $125.44

Year 3 = $125.44 x 1.12 = $140.49

Year 4 = $140.49 x 1.12 = $157.35

Year 5 = $157.35 x 1.12 = $176.23

Year 6 = $176.23 x 1.12 = $197.38

So, $100 turns into $197.38 in 6 years at 12%

Why does this matter? This means that you can place money into an investment vehicle (I like investing into the stock market), and let it grow. If $100 does that @ 12%, what is $100 a MONTH look like in 6 years? 12 years? 18 years? 24 years?

Year 6 = $ 10,471

Year 12 = $ 31,906

Year 18 = $ 75,786

Year 24 = $165,612

$2500 a month invested @ 12%?

Year 14 = over $1,000,000

Where would this $2500 a month come from? Cashflow. Checkout the Budgeting 101 course for more info on determining your cashflow.

This takes consistency. But it takes time. Years. Decades. And risk. That return on investment is not guaranteed. And inflation.

This is what people mean by letting “your money make money”. The investment ($100), if you let it grow with the investment.

3 main investment vehicles

Stock Market (REITs, Dividend Stocks, Utilities) ---> which I prefer

Real Estate (Rental Property, Commercial)

Businesses (Startups, Equity)

There is alot more to this money game. Stay tuned for more.