The Rule of 72

[jaxson]

The Rule of 72....The most important rule of investing..anyone know what it is?

[101ABN]

Method of calculating the doubling time?

[ReformedLiberal]

Aug 16, 2011 19:34:29 GMT -8 101ABN said:

Method of calculating the doubling time?

Simplified (but not always accurate) method of ESTIMATING the time it takes to double your money at a given interest rate.

Typically used as an off-the-cuff comparison of two or more potential investments in order to ballpark the relative expected ROI.

[jaxson]

Off the cuff maybe, but if you are the kind that wants to buy and hold dividend paying stocks the rule of 72 is a great tool. As long as the company has little or no debt and a good cash flow.

[michiganmoon]

Aug 17, 2011 14:27:03 GMT -8 jaxson said:

Off the cuff maybe, but if you are the kind that wants to buy and hold dividend paying stocks the rule of 72 is a great tool. As long as the company has little or no debt and a good cash flow.

I think dividend investing is smart. No need to move the stocks around or time the market if you put it into strong blue chip companies - monitor the company, but don't time it. Just collect the dividends.

If a company eliminates the dividends - get out.

[michiganmoon]

Check that - reinvest the dividends - compound your growth.

[jaxson]

Over the long run they are a winner, as long as you do the home work and keep an eye on the company.
I like companies that have been around along time. DuPont, Pepsi co, ConEd, SDG&E I don't like companies that rely on government contracts or subsidies. Annaly Capt has been a good one, it's paying a 14.36 dividend..
DRIPs are a good way to go if you have 20 years or more to go.