Rule Of 72 2020-02-24 08:00:00

Rule Of 72

The rule of 72 is a quick and easy mental calculation that tells you the number of years it will take for an investment to double, given some rate of interest. The calculation is based on compound interest, which calculates accumulated. The rule of 72 can be used on investments and inflation. As an example, an investment earning 8% interest will double in 72/8 = 9 years. For inflation, it tells you the number of years a dollar amount will halve, as inflation eats away at the non-invested savings. For example, 3% inflation means it will take 72/3 = 24 years to halve the value of a specific amount of savings.

 


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