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Writer's pictureMandino Tan

Money Rule #3: It's a Double Game

Updated: Dec 31, 2021


You could stop reading this right now if you understand this. The entire game of money is about doubling your money. What do I mean by double your money? Let me explain it to you this way. If you have $1,000 cash in your bank account, you are ten doubles away from having a million dollars. You're five doubles away from $32,000, 13 doubles away from having $8.192 million, and 14 doubles away from 16 million dollars. How soon can you double your money? That's it. It's a doubles game. Can you take that $1,000 and double it to $2,000 in the next year? Now that it's $2,000, you're nine steps away from a million dollars. If you already have $100,000 in your account, then you're three to four doubles away from a million dollars. Building wealth is a piece of cake when you understand the doubles game.

Now that you have the basic concept, the question comes down to two things, your risk tolerance and your horizon. Your risk tolerance depends on your age. If you're 65, your risk tolerance is lower than if you're 22. Horizon has to do with time. What is your time horizon? The time horizon could be, "I want to have a million dollars by ten years from now." Great. If you want to have a million dollars by ten years from now, first start with what do you have right now. Then you play the doubles game. For instance, if you have $17,000, you'd ask how many doubles do you need to get to a million bucks. From there, you can determine a time goal for each of the doubles to meet your goal within ten years. It's a simple game, as long as you know the amount you have, the amount you want, and your risk tolerance, and time horizon.


DISCLAIMER:

All information are for informational purposes only and should not be relied upon as financial advice.

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