72 / 9% = 8 yearsRemember, this is merely an estimate. The actual time required to double your investment at 9% is 8.043 years. Not too far off of an estimate.
Saturday, June 30, 2012
Rule of 72
In a previous blog I discussed the power of compounding interest. But how long does it take until your money doubles? This is a common question, and should be as the point of investing is to increase the value of your money. There are calculators you can easily Google which will calculate how long it will take to double/triple the value of your account, but there is an easy way to calculate an estimate. This is called the Rule of 72. It is a really easy way to estimate the time required to double your investment. To perform the calculation, simply take 72 divide it by the interest rate (in percentage) of your return and the answer will be an approximate in the number of years to double your investment.