- Erik shares a story of a conversation he recently had with an individual who studied finance and daily trades in the market.
- It was interesting to find that the individual was not aware of different financial concepts.
Erik revisits the rule of 72, the compound interest formula where we take the number 72 and divide it by the interest rate we earn on our money and it equals the number of years it will take our money to double.
72 / % rate = # years money will double
- Erik also talks about the indexing strategy where our money is not in the market but is based on market performance and we get the growth but are protected from the downside in case the market goes down. He brings up index funds which people are familiar with where a mutual fund is composed of specially the S&P 500.