Rule of 72

rule of 72

 

Rule of 72:

Rule of 72 is a little tool that gives you the amount of time that it takes your money to double based on an interest rate.

Here is how the tool works.

If you divide your interest rate into 72 you will get the number of years it takes to double your money.

Example: 5% interest into 72 gives you 14.4 years for your money to double at 5%.

Disclaimer and Example:

This tool provides an approximation, not an exact amount.

For instance if you take $1 and compound it yearly for 14.4 years at 5% you will get $2.02. It is a good rule of thumb for figuring out how your investment will do.

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