Understanding Compound Interest & the Rule of 72
Your child’s wealth-building superpower starts here.
Wealth doesn’t just come from what you earn — it’s built on what you understand. And if you
want to raise a My Billionaire Baby™, there are two powerhouse principles you absolutely need
in your toolkit: compound interest and the Rule of 72.
These are more than just math concepts — they’re how the wealthy multiply their money quietly,
consistently, and legally. The earlier you understand them — and teach them to your children —
the sooner you can start building a legacy that outlives you.
Let’s break it down.
What is Compound Interest?
Compound interest is what happens when your money earns money — and then that new
money earns more money. Over time, it snowballs. It’s not just your original deposit growing;
it’s your interest earning interest.
Think of it like planting a tree:
● Year 1: You plant one seed (your original deposit).
● Year 2: That seed grows into a tree and drops more seeds (interest).
● Year 3: Those new seeds grow more trees (more interest).
● And on and on.
The more time you give it, the bigger the financial forest.
My Billionaire Baby™ Tip
Compound interest rewards time more than talent. The earlier you start, the less money you
need to invest to build serious wealth.
What is the Rule of 72?
The Rule of 72 is a shortcut to estimate how long it will take your money to double — based
on the interest rate.
Here’s the formula:
72 ÷ Interest Rate = Years to Double
For example:
● If your account earns 6% interest:
72 ÷ 6 = 12 years to double
● If your account earns 12% interest:
72 ÷ 12 = 6 years to double
The higher the interest rate, the faster your money doubles. Now imagine doubling… and
doubling again… and again. That’s how legacies are made.
Let’s Put It Into Perspective — For a Child
Say you open a life insurance policy with cash value that earns 6% interest, and you fund it
with $5,000 for your child at age 5.
Using the Rule of 72:
● 72 ÷ 6 = 12 years to double
● Age 5: $5,000
● Age 17: $10,000
● Age 29: $20,000
● Age 41: $40,000
● Age 53: $80,000
● Age 65: $160,000
And that’s assuming no additional contributions. Add in yearly payments or bonuses, and the
numbers grow even faster.
That’s the quiet power of compound interest — especially when combined with a policy that
builds cash value, grows tax-deferred, and can be borrowed against.
Why This Matters for Generational Wealth
Most people teach their kids how to spend.
We teach our kids how to multiply.
When you plant the seed of compound interest early in your child’s life — through a cash-value
life insurance policy, savings plan, or investment account — you’re doing more than saving
money:
You’re buying them time.
You’re training them to think long-term.
You’re giving them a head start in the wealth race.
We don’t raise consumer-minded kids at My Billionaire Baby™. We raise wealth-conscious
children who understand money is a tool, not a toy.
