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Do You Know How To Double Your Money? Try the Rule of 72!

Earning interest on your money is a great way to watch your savings grow! Have you ever wondered how long it would take for you to double your savings? The Rule of 72 says that to find the number of years required to double your money at a given interest rate, you divide the interest rate into 72.For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years. This formula also works backwards. If you want to double your money in six years, just divide 6 into 72 to find that it will require an interest rate of about 12 percent.Below you will see that your money will double more quickly at higher interest rates.
  % Interest Paid   Number Years to Double
72 divided by 2 equals 36
72 divided by 3 equals 24
72 divided by 4 equals 18
72 divided by 5 equals 14.4
72 divided by 6 equals 12
72 divided by 7 equals 10.3
72 divided by 8 equals 9
72 divided by 9 equals 8
72 divided by 10 equals 7.2
72 divided by 11 equals 6.5
72 divided by 12 equals 6

The Rule of 72 assumes that the interest is compounded annually. If the interest is compounded more frequently, it will take less time to double your money.

Does this concept help you visualize a savings goal?

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Posted: 1/29/2012 with 0 comments

Categories: Education, Finances, Investments, Saving

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