Einstein's "RULE of 72" provides us with an
easy formula to figure how long it takes to DOUBLE YOUR MONEY! As
a rule of thumb, at 10% interest money will double every 7.2
years.
It doesn't matter if the investment can be a
stock, a bond, a CD, and any other way of getting a return on your
money. You don’t need a calculator and you can use this method to
quickly calculate in your head how long it will take to double
your money. All you need to do is divide 72 by the annual rate of
return. The result would be approximately the number of years
required for your investment to double in size.
EXAMPLE:
If you have $10,000 in a savings account at a
bank, earning you 3.0%, divide 3.0% into 72. It will take 24.0
years to double your money.
Einstein once said, "If people understood the
Rule of 72 they would never put their money in banks!”
If you have $10,000 invested in a mutual fund
that returns 10% divide 10% into 72. Your money will double in 7.2
years. A much better return!
Doubling your money is a VERY important part of
wealth accumulation. If your money is in the bank at 4%, how many
doubles do you have left in your lifetime?
Einstein's
Rule Of 72