Compound interest – rule of 72 Friday, December 28, 2007
Posted by ei-forum in Investing.trackback
A lot of people often struggle with compound interest. The “Rule of 72″ is a handy and simple way to find out how long it will take you to double your money – and you will not even need to use a calculator!
All you have to do is divide the assumed growth rate (or net interest rate) into 72 to get your answer. For example, with a growth rate (or net interest rate) of 6%, it will take you 12 years to double your money: 72/6=12 and here are a couple more:
- @ 5% = roughly 14.5 years
- @ 10% = just over 7 years
- @ 15% = just under 5 years
- @ 25% = just under 3 years
Please note that this is just a general rule to help you and that the exact figure varies slightly.
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