the loan

A lady walks into a bank in New York City and asks for the loan officer.She says she's going to Europe on business for two weeks and needs to borrow $5,000.

The bank officer says the bank will need some kind of security for such a loan, so the lady hands over the keys to a new Rolls Royce parked on the street in front of the bank.

Everything checks out, and the bank agrees to accept the car as collateral for the loan. An employee drives the Rolls into the bank's underground garage and parks it there. Two weeks later, the lady returns, repays the $5,000 and the interest, which comes to $15.41.

The loan officer says, "We are very happy to have had your business, and this transaction has worked out very nicely, but we are a little puzzled. While you were away, we checked you out and found that you are a multimillionaire. What puzzles us is why would you bother to borrow $5,000?"

The lady replied, "Where else in New York can I park my car for two weeks for 15 bucks?"

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rule of 72

According to Albert Einstein (1879 - 1955) "Compound interest is the marvellous invention" of human kind. It can work for you, or against you. When you invest, it works for you. When you borrow, it works against you!

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The rule of 72 says that in order to find the number of years required to double your money at a given interest rate, you can just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at two percent interest (average annual interest rate of banks), divide 72 by 2 and you will get 36 years. Too much waiting period right? But that's the reality.

The rule of 72 is really accurate, as long as the interest rate is less than twenty percent.

You can also do it backwards. If you want to double your money in six years, just divide 72 by 6 and you find that it will require an interest rate of about 12 percent. Get it?

Remender: "It's not how much money you make but how much money you save"