How long will it take: The Rule of 72

In the world of finance, there’s a thing called The Rule of 72.

What that rule is about is to basically let you estimate how long it will take to double your money, given an amount of expected return.

There’s actually a complicated way in explaining The Rule of 72 but in this article, I’ll keep it simple.

I’ll be using an example to illustrate The Rule of 72:

Assume you invested $100 with an expected return of 13% p.a.

Using The Rule of 72:

72/13 = approximately 5.5 years.

In other words, you’ll double your money in about 5 years 6 months. Do take note that it is a rough estimate.

Read more on the Wikipedia entry here.


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