Tuesday, November 26, 2013

Double Your Money In How Long? Use The Rule of 72

The Rule of 72 tells you how long it takes an investment to double. The number 72 is divided by the interest rate and you get a rough idea of the number of years the doubling will take. If you have $10,000 in investments and they earn 4 per cent, it will take 18 years for the $10,000 to become $20,000 (72 divided by 4 = 18).
If you know how many times the investment has doubled, you can work back to find the rate of return. A $10,000 investment that doubled to $20,000 in 18 years returned an annual rate of return of 4 per cent (72 / 18 = 4).

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