![]() The rule of 72 is a useful tool for estimating how long it will take for an investment to grow, but it is important to remember that it is only an estimate. This has the effect of accelerating the growth of the investment. The rule of 72 is a rough estimate and does not consider compounding, which can significantly impact the length of time it takes for an investment to double.Ĭompounding occurs when the interest earned on an investment is reinvested so that the next period’s interest is earned on both the original and reinvested interest. Likewise, if you are earning a 12% annual return on your investment, it will take approximately 6 years for your investment to double (72/12 = 6). ![]() ![]() The resulting number is the approximate number of years it will take for the investment to double.įor example, earning an 8% annual return on your investment will take approximately 9 years for your investment to double (72/8 = 9). To use the rule, simply divide 72 by the annual rate of return. The rule of 72 is a simple way to calculate how long it will take for an investment to double, given a fixed annual rate of return. What Are The Disadvantages Of Using The Rule Of 72?.How Does The Rule Of 72 Work With Inflation?.How Deferred Annuities Can Use The Rule For Retirement Savings.What Are Three Things The Rule Of 72 Can Determine?.Best Interest Rates For Savings Menu Toggle.Sell Your Life Insurance Policy Menu Toggle.Retirement Calculator: Estimate Savings And Income. ![]()
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