The Rule of 72
One of the earliest ‘laws of magic’ that I can recall learning, I learned from my father. It’s called the Rule of Seventy-Two. It’s expressed in a lot of different ways, all of which didn’t make very much sense to me until I wrote about it for myself. Yet Arabic merchants in the Indian Ocean were using it for risk-assessment in the 8th century AD. Italian merchants of the 14th century were using it for risk-assessment in the middle of the Black Death decades. Chinese merchants on the Silk Road were using it, too. This isn’t a mathematical universal, but it’s close enough to a mathematical universal to be worth paying attention to.
Here’s my formulation of it: Seventy-two is always the product of two numbers, which are the interest rate and the number of years it take your money to double at that interest rate. There are other formulations, too, including this Wikipedia article that has the exact formula:
If your interest rate is 4.5%, for example, then it will take 16 years for your money to double, because 4.5 x 16 is 72. If your interest rate is 9%, it will take eight years for your money to double.
It doesn’t matter how much money you invest. If you put $100,000 into an investment, you will have $200,000 after 7.2 years at 10%. If you you put $5,000 into the exact same investment, you’ll have 10,000 dollars after the same 7.2 years.
It doesn’t matter how much additional money you put into the investment. If you put $100 into a 7.2% investment in year one, and $100 into the same investment in year two, that $100 will become $200 in ten years… and the second $100 will become $200 in ten years, too, just one year later.
Now, the Rule of 72 is a way of approximating the effects of compound interest with a quick mathematical trick. The MoneyChimp app here compares the actual, calculated compound interest with the estimate from the Rule of 72, and they do differ in some important respects — over a longer period of time, the Rule of 72 will tend to overestimate the amount of time it takes for money to double, while it will underestimate the amount of time it takes for money to double over shorter timeframes.
If you assume that a given interest rate is a marker of risk, the Rule of 72 gives you the power to estimate the risk or trustworthiness of a given investment. The higher the interest rate, the more likely that it’s a risky investment. The Rule doesn’t doesn’t assess the risks for you. It doesn’t take into account the risk of the investment going bankrupt, or the vagaries of the market from changing your interest rate, or a renegotiation of the deal. It only says that if you have a choice between a 10% investment and a 7.2% investment, that you have a choice between doubling your money in 7.2 years or 10 years. And assessing the risks of one option over the other is your business and your risk, not anyone else’s. No one can assess that risk for you; they can advise you, perhaps, but not more than that.
There are three important takeaways for the magician, the wizard, the witch or the druid from this.
First, recognize that growth is a natural process that obeys certain mathematical laws. If you have $5000 but you need $10,000 in six months…. your desired rate of return is 144% (which is gross). There are very few methodologies that allow that sort of wealth to appear that suddenly; most of them involve running rough-shod over other people either through violence or chicanery of some kind.
Second, recognize that doubling your money is difficult. Focusing on emergency money magic is challenging in part because there are a great many other people working incredibly hard at doubling their money at the same time that you are not working incredibly hard at doubling yours. For every witch trying to work financial magic with a few dollars on the altar, there is a banker or a hedge fund manager doing the same kind of magic with Benjamins instead of Washingtons (And remember that Benjamin Franklin, the US Founder on the $100 bill, was the Bill Gates and Mark Zuckerberg and Sergey Brin of the 13 colonies… he ran the postal service, the public libraries, the book publishers, and the newspapers. He was also an admitted leader of a conspiracy… Worth thinking about, all on its own). Just as using magic to win the lottery rarely works, so is magic to double your money without effort, quite challenging.
Third, recognize that doubling your money requires patience, and strong nerves. If you invest your money at serious risk in a high-end investment with a friend’s startup company, you should expect some significant returns in only a few years — if he’s still trying to pay you back after five years, recognize that your money is as good as gone. The friendship may survive… but the business partnership shouldn’t.
Which brings us to the magic.
The Rule of 72 is an estimation that you can do in your head. You don’t need a calculator (or you shouldn’t) to work out that a given deal is a high risk for a short period of time, or a low risk for a long period of time; or that a given loan will ultimately be very cheap for you or very expensive. There’s no magic in that, really, except some common sense. Any calculation that’s been used for a thousand years is unlikely to be overturned by some magic in the woods behind your house; you could perform a spell at Stonehenge under a full moon at Summer Solstice, and you probably wouldn’t be able to change the equation for growth.
But by treating the Rule of 72 as a short-hand way of predicting how wealth grows, you can focus your magic on the things that you can change in wealth magic. You can enchant for better opportunities, for example, where you recognize businesses that are likely to grow faster (and return wealth to you). You can enchant yourself for patience and nerves, to wait out an investment’s growth. You can practice divination, and inquire on the question, “will this business double my money in five years?” You can inquire of spirits (hey, guess what! There’s whole series or classes of spirits that are arrayed in groups of 36 [insert shameless plug here] or 72! There are even spirits in groups of 24 and 18 and 12 and 9 and 6 and 4 and 3 and 2! All of those numbers go into 72 evenly! Fancy that!) to gain better ideas about how and where and for how long to invest money, or what sort of projects should have your attention and your wealth. You can enchant yourself for discipline and severity to work hard enough to earn money to set aside.
You can also enchant yourself to not care. If making a pile of money is your goal, your actual goal, magic is probably the wrong field of endeavor — try hedge fund management or investment banking. But if your goal is to build a business as an artist, or as a successful small businessperson, or as someone else’s employee in a field of work you care about, then focusing your enchantments and magic on the work you care about, and using guardian and protection magics on your savings and retirement wealth passively, is probably the way to go.
It is probable that you can’t change the underlying algebra of growth. Some variant of the Rule of 72, whether the true interest calculation or the surprise windfall, is likely always going to be in effect. So focus your efforts, and your magic, on other parts of the equation — how you spend your time, how you cultivate your patience and your nerves, and how you marshal your resources toward longer-term goals.
The Greater Working
One of the critical takeaways, though, is that the success of wealth-magic operations (or most magical operations) is rarely measured in days or weeks, but in years. To call the 72 angels of the Shemhamphorash, for example, or the 36 Decans of the year, takes a year if you don’t miss any days. In either operation, you’re performing a working about every 4-6 days, or at least once a week if not twice.
If your working is specifically intended to double your wealth in a year, you’re looking at 72% growth, or 172% more than what you have now. How will you measure that?
You can look at how much money you have in your retirement accounts. If it’s $0 now, it will be $0 still with a 172% increase. If it’s $1000, you’re looking to add $720 to your account this year (that’s $13.85 a week).
You can look at how much money you have in your savings account. Again, a 72% increase over $0 is still zero dollars.
You can look at the quality of food you’re eating. What does it mean to be eating 72% better? You can look at the quality of exercise you’re getting, and the management of your health issues. What does it mean to be 72% healthier? What does it mean to be 72% better at the skills related to your work — what knowledge or skills do you not have now, that you’ll need for you to think of yourself as 72% better? What will it take for your bosses to regard you as about 75%-more-competent? Is 72%-better at everything enough for you to be self-employed?
Take a look at your social media, too. Are you following the right people? Are the right people following you? What does it mean to have a 72% larger network of friends and allies and soft contacts?
The thing to recognize is that 72% better is not a sustainable growth model. This is not a thing that can be done year-over-year. It’s a spurt, a leap forward, a gangly adolescent phase in which you make enormous changes to becoming a fully-formed adult. But if you don’t know what you’re going to change, or what you want to be better, you’re not going to be able to sustain this kind of growth.
Because 72% growth requires sustenance. A tree that grows 72% in a year is collecting enormous amounts of sunlight and water; its root systems are breaking up rocks and collecting soil nutrients in vast quantities. Your sustenance is going to be similar, coming as it does from Earth, Air, Fire, and Water — material resources, intellectual capital, personal passion, and contained emotion. I’m not saying that you can’t cry for a year, by the way… only that you’re going to have to manage your emotional responses to matters as you grow… and you will have to use your emotions to accomplish goals, in much the same way that a dam holds back tens of thousands of gallons of water to generate vast quantities of electricity.
But that is what a Rule of 72 working should accomplish. It should be a deliberate and conscious effort to be substantially better off in a year than you are now, in several conscious, deliberate, and measurable metrics. It is not easy. But it can be done.