The Rule of 72

Have you ever wanted to find out how many years it will take to double your money? Or have you ever wanted to find out what interest rate you will need to double your money in a set of years? There is a very simple and effective method to answer your question. It is called the Rule of 72.  Here is out it works.

Let's say you put $1000 into an investment that pays 6% interest every year and you want to find out how many years it will take your investment to double. Using the Rule of 72, you would take the Number 72 and Divided It By the Interest Rate. 

Our calculation would be the Number 72/ the Interest Rate. 

72/6% = 12 Years to Double Your Money

Now let's say 12 years is too long of a time period for you to double your money. Instead, you want to double your money in 8 years.  Using the Rule of 72, you would take the Number 72 and Divided It By the Number Years in Which You Want to Double Your Money. 

Our calculation would be the Number 72/ the Number of Years

72/8 Years = 9% Interest Rate

The Rule of 72 is a great way to determine how long it will take to double your money or what interest rate you will need. I hope this information proves useful.

Disclaimers

1. I.F.S.G. is a fee-based registered independent advisory specializing in investments and life insurance solutions.
2. I.F.S.G. does not give tax advice. You should consult your tax professional before making any financial decisions.
3. Securities provided by Trade PMR. Fixed income products provided to Trade PMR by Advisor Asset Management, Crew & Associates, and JBB Financial.
4. Investing Money in securities exposes investors to risks including loss of principal and past performance is not an indicator of future returns. Investors should carefully consider investment risks, objectives, charges, and expenses.

Matt Dressel is the Owner of the Independent Financial Solutions Group. If you have any questions about this article, he can be reached at 252-515-0242 or matthewdressel.ifsg@gmail.com