Interest–Part 3 Rule of 72

A quick and easy way to calculate compound interest is using the rule of 72.

In finance, the rule of 72 is used to estimate how many periods the investment will be doubled, given the interest percentage per period.

The formula is very simple


If you can get a 12% interest or return on your investment per year, how many years will you double your money? If you invest Rp 10,000,000, when will it be Rp 20,000,000?

n = 72 / 12

n = 6

So it will take approximately 6 years to double your money or make your investment become Rp 20,000,000.


Let’s take another example. If you want to double your money in 3 years, what is the rate of return that you need?

3 = 72 / r

r = 24

So you will need an interest of 24%


What is the number if you want to know when your money is tripled? Use Rule of 114

What is the number if you want to know when your money is quadrupled? Use Rule of 144

Remember to use this rule as an ESTIMATE because it is not meant to be exact. It is good for rough calculation that you can use without a financial calculator or spreadsheet.

Learn and Grow!

Inge Santoso, B Com, CFP®

Interest – Part 2 Compound Interest

salt compound

Compound interest is interest upon interest. That is, when an interest payment is added to the principal and then the whole thing (principal + interest) earns interest.

How does it work?

If you invest Rp 1,000,000 and the compound interest is 10% a year, then

Year 1 : Rp 1,000,000 + (Rp 1,000,000 x 10%) = Rp 1,100,000

Year 2 : Rp 1,100,000 + (Rp 1,100,000 x 10%) = Rp 1,210,000

Year 3 : Rp 1,210,000 + (Rp 1,210,000 x 10%) = Rp 1,331,000 and so on


Compound interest is what can make you rich when you invest. One of the most important elements in compound interest is time. The longer the time, the greater the impact.

That’s why the best time to invest is yesterday! Smile  Since you cannot go back to yesterday, then the next best time is NOW!


Perhaps you have heard this story…

One day a father and his son went to play golf. Before they started the game, the father asked his son.

“Son, would you prefer getting a lump sum Rp 50,000,000 or getting Rp 1,000 on the first hole and doubling it for next hole until you reach the 18th hole?”

After thinking for a few seconds, his son said, “Rp 50,000,000, Dad.”

“That’s why you still need to learn, Son. I’ll show you why.”

golf course 

“If you choose doubling that Rp 1,000, at the 18th hole, you will have Rp 131,072,000 and if you total all the money from hole 1 to 18, you will get a sum of Rp 262,143,000. You will get about 5 times more.”


What can we learn from this story?

1. It’s OK to start small. The most important thing is to start NOW.

2. When you have more money, save and invest more!

3. You may not be able to get an interest of 100% like in the story, but there are financial instruments that can get you better return than bank saving rate.


Learn and Grow!

Inge Santoso, B Com, CFP®

Envelopes for Financial Management


Envelopes made by Anna and Anis. Thank you.

Instead of bringing your wallet full of credit card when you go shopping and you end up spending more than your budget, you can bring something like the picture above. It is made of 6 envelopes bounded together.

At the beginning of the week, you can allocate money for:

  1. Grocery shopping
  2. Transport (petrol, tickets)
  3. Dining out
  4. Bill payment due that week (utilities, school fee, etc.)
  5. Fun or entertainment (movie, book, magazine)
  6. Emergency fund

Put the budgeted money into each envelope.

Whenever you buy something or pay something, use the money from the appropriate envelope and put the receipt into that envelope. Basically you exchange the money with receipt.

When there is no more money inside the envelope, it is a sign to stop shopping. Remember…no cheating! Do not move money from one envelope to another.

At the end of the week,

  • You can use the receipts to record your expenses for the week
  • Any money left in the envelope, you can either save them (recommended) or you can use it for the following week

It is a simple and practical way to manage your finance.

If you use similar methods, please share in the comments.

Learn and Grow!

Inge Santoso, B Com, CFP®

Demystifying Get Rich Quickly Tip No 1 – Marry Someone Rich

I often heard that one of the ways to get rich quickly is to marry someone rich. I saw this story posted on Facebook and I would like to share it here. I don’t think this is a real story, but we can always learn from it. 

A reply from CEO of J.P. Morgan to a pretty girl seeking a rich husband

A young and pretty lady posted this on a popular forum:

Title: What should I do to marry a rich guy?
I’m going to be honest of what I’m going to say here. I’m 25 this year. I’m very pretty, have style and good taste. I wish to marry a guy with $500k annual salary or above.
You might say that I’m greedy, but an annual salary of $1M is considered only as middle class in New York. My requirement is not high. Is there anyone in this forum who has an income of $500k annual salary? Are you all married?

I wanted to ask: what should I do to marry rich person like you?
Among those I’ve dated, the richest is $250k annual income, and it seems that this is my upper limit. If  someone is going to move into high cost residential area on the west of  New York City Garden(?), $250k annual income is not enough.

I want to ask a few questions:
1) Where do most rich bachelors hang out? (Please list down the names and addresses of bars, restaurant, gym)
2) Which age group should I target?
3)  Why most wives of the riches are only average-looking? I’ve met a few  girls who don’t have looks and are not interesting, but they are able to  marry rich guys.
4) How do you decide who can be your wife, and who can only be your girlfriend? (my target now is to get married)
Ms. Pretty

A philosophical reply from CEO of J.P. Morgan:

Dear Ms. Pretty,
I  have read your post with great interest. Guess there are lots of girls  out there who have similar questions like yours. Please allow me to  analyze your situation as a professional investor.

My annual income is more than $500k, which meets your requirement, so I hope everyone believes that I’m not wasting time here. From the standpoint of a business person, it is a bad decision to marry you. The answer is very simple, so let me explain.

Put  the details aside, what you’re trying to do is exchanging "beauty" with "money" : Person A provides beauty, and Person B pays for it, fair  and square. However, there’s a deadly problem here, your beauty  will fade, but my money will not be gone without any good reason. The  fact is, my income might increase from year to year, but you can’t be  prettier year after year. Hence from the viewpoint of economics,  I am an appreciating asset, and you are a depreciating asset. It’s not  just normal depreciation, but exponential depreciation. If that is your only asset, your value will be much worse 10 years later.

By the terms we use in Wall Street, every trading has a position, dating with you is also a "trading position". If  the trade value dropped we will sell it and it is not a good idea to  keep it for long term – same goes with the marriage that you wanted. It  might be cruel to say this, but in order to make a wiser decision any  assets with great depreciation value will be sold or "leased".

Anyone  with over $500k annual income is not a fool; we would only date you,  but will not marry you. I would advice that you forget looking for any  clues to marry a rich guy. And by the way, you could make yourself to  become a rich person with $500k annual income.This has better chance  than finding a rich fool.
Hope this reply helps.
J.P. Morgan CEO

I agree that it is easier and better to make yourself rich by learning and practicing good money management rather than finding a rich fool to marry.

What can you learn from this story? Please share in the comments.

Learn and Grow!

Inge Santoso, B Com, CFP®

Fun Activities for Long Weekend – Treasure Hunt


Do you still have a piggy bank? I do. I have a money jar to put all the coins that I get during the day. 100, 200 or 500 rupiah coins are coming our way almost everyday, and many of us think that they are just small money and we put or even throw them all over the place.

Have you ever counted how much money in form of coins that you have in your house and car right now? Have you every tried going on a treasure hunt in your house and car and just collect all the coins and put them in a jar? You should try it sometime. I knew someone who did it and she was really surprise to find more than Rp 100,000 in form of coins all over her house and cars.

Tomorrow is long weekend. If you have children, instead of going to the mall and spend money, why don’t you go on a treasure hunt around the house with your children? It’s free and fun – moreover you may be surprised with the amount of money you find. 

Wishing you a happy long weekend!

Learn and Grow!

Inge Santoso, B Com, CFP®

Positive Thinking Can Ruin Your Financial Life

soup positive perception

We often hear that positive thinking is essential for our happiness. In finance however, positive thinking can also lead us to financial disaster. When does this occur?

Some examples:

1. Instead of starting to prepare for your children’s education fund, you tell yourself to have faith that when the time comes, you will have enough money to pay for it without ruining other financial needs.

2. Instead of starting to prepare your retirement fund, you rely on your employer to prepare it for you. You think positively that they will keep you forever and provide for you.

3. Instead of starting to learn how to invest your money well, you just think positively that the market is just going to go up and up, doubling your money every few years.

In finance and perhaps even in general life, it is better to have realistic thinking than positive thinking. Realistic thinking does not mean negative thinking either. Realistic thinking is understanding that conditions and situations will change all the time. The market may go up or go down. You may change job or even get fired. Your business may hit rough patches. There are inherent uncertainties in life.

What can we do? Be prepared!

  • Make sure that you have enough emergency fund
  • Make sure that you have enough insurance to cover for death, sickness or any other eventualities
  • Make sure you prepare funds for your children’s education need as early as possible
  • Make sure you start saving and investing for your retirement fund
  • Make sure you learn new skills to keep you relevant in your company
  • Make sure to maintain and expand your network

Be realistic to changes in life.

Keep learning! Keep growing!

Inge Santoso, B Com, CFP®

In Remembrance of My Grandfather

Grandpa 88 cake

A photo of my grandfather on his 88th birthday. He passed away because of old age, exactly two years ago at 90 years old.

My grandfather was a frugal man and very money savvy. Even in his old age, he was still going from bank to bank looking for the best interest rate for his retirement saving account. Most of the customer service people in the banks knew and welcomed him whenever he came to the banks.

He was also very organized and he kept good records of his money. He always knew how much money he had in each bank account and the interest he was getting on that account. His financial profile was very conservative because of his age. He only put money in term deposit and saving accounts.

He was also very healthy and he almost never had any medical cost. He had lived a very healthy lifestyle, eating healthy food, doing regular exercise, having enough sleep and rest. 

Although he had other shortcomings, but when it comes to finances – we can always learn from him.

  1. be frugal
  2. keep good records
  3. make your money work hard for you
  4. as you get older, be more conservative with your investment
  5. have a healthy lifestyle – less medical and care cost

Learn and Grow

Inge Santoso, B. Com, CFP®

Gadget NOW or Cash LATER?

things or money

If you have Rp 209,000,000 right now, and somebody offers to give you:

  1. Samsung Galaxy Note II (Rp 7,499,000) NOW
  2. Rp 8,300,000 ONE YEAR LATER

Which one would you choose?

These kinds of advertisements and offers from financial institutions can be very tempting. Since you have the money in the bank anyway, why don’t you delay using it for one year and in exchange you get a gadget of your choice? You are still earning a small interest on your money too.

When you start calculating the interest or return that you can make by putting the same amount of money in term deposit or other investment, then you can see that you would end up paying more for the gadget. However, most people can’t be bothered calculating the future value of their money, so they won’t realize this.

So when you are making a money decision;

Do you gravitate towards INSTANT or DELAYED GRATIFICATION?

Do you want to have something NOW or have more money LATER?

We all wish we can have something now and also have more money later, but it does not work that way. What we enjoy now, will cost us something in the future. Choose wisely!

Learn and Grow!

Inge Santoso, B. Com, CFP®