The Comprehensive Guide to the Rule of 72

3 minutes

What is the ‘Rule Of 72’

OLYMPUS DIGITAL CAMERA

The rule of 72 is a shortcut to estimate the number of years required to double your money at a given annual rate of return. The rule states that you divide the rate, expressed as a percentage, into 72:

Years required to double investment = 72 ÷ compound annual interest rate

Note that a compound annual return of 8% is plugged into this equation as 8, not 0.08, giving a result of 9 years.

Based on our conversation earlier about compounding and how it is your friend. We are going to discuss how the rule of 72 can help you.

 

Continue reading “The Comprehensive Guide to the Rule of 72”