Rule of 72

This is a quick mental trick you can use to get valuable information on your investments.

Divide 72 by the percentage rate of any investment that you have and it will (approximately) give you the number of years until the investment doubles.

For example, if you invest $1000 with compounding interest at a 9% interest rate, the rule of 72 would suggest that it would take 8 years for the investment to be worth $2000. (72/9%=8years)

If you were getting a 5% return it would take 14.4 years to double. (72/5%=14.4years)

It does require that you use a bit of those 5th grade division skills, but I know you can do it.

So, if you have $10,000 saved at age 30 and you assume a 9% return that $10,000 would double every 8 years.

• at 38 years old it would be $20,000
• at 46 years old it would be $40,000
• at 54 years old it would be $80,000
• at 62 years old it would be $160,000

All without adding another penny to it!!! This is the joy of compounding interest.

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