The Rule of 72

The Rule of 72

Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.

Albest Einstein

The Rule of 72 is a quick and easy way to calculate the proximate time or number of periods it takes for your investments to double up with the help of compounding.

So if you’ve ever wondered how long does it take for you to double your money here’s how it works.

You divide the number 72 by the percentage return you have for your investment.

If you have a 1% annual return rate on your investment then you divide 1% to 72 which means that it order for your to double your investment it would take proximately 72 year. The exact number is 69.66 years.

If you have a 2% annual return rate on your investment then you divide 2% to 72 which equals 36. So at a 2% return you would need to wait 36 years for your investment to double.

An annual return rate of 7% take around every 10 years to double while an annual return of 24% doubles every 3 years.

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