Monday , 17 June 2024

Your Money and the “Rule of 72”

At first glance, a 7% return on your investment may not seem that impressive, yet what if you heard that your money could double in roughly 10 years?

This post is an abridged version of the original article originally posted on Advisor Channel.

Using the classic rule of 72, an investor can estimate how long it takes to double their money. At 7% annual returns, an investor would see $10,000 grow to $20,000 in about a decade by taking 72 and dividing it by 7%, the rate of return.

The graphic below takes the rule of 72 shortcut and uses the more precise logarithmic formula to show how long it takes to grow your money at different annualized returns.

Visualized: How Long Does it Take to Double Your Money?