How to estimate when your money will double – ‘The rule of 72’
With investors facing increasing market volatility and persistent inflation, it is easy to forget that investing is a long-term game
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With investors facing increasing market volatility and persistent inflation, it is easy to forget that investing is a long-term game
With investors facing increasing market volatility and persistent inflation, it is easy to forget that investing is a long-term game. And with many retirees living well into their 90s, they may also want to know how their money may grow over time. Through the markets ups and downs, there are principles that do not change for all investors, whether risk-averse or risk tolerant. One of those principles is the rule of 72.
The rule of 72 is a simple formula that can help estimate how long it will take to double your money. It essentially calculates the period of time that it will take to double your money if you earn an x% after-tax compound annual rate of return. Conversely, the formula can also be used to calculate the rate of return that must be earned to double your money in X years1.
*If you know one of these two variables, you can calculate the other.
1Source: https://www.investopedia.com/terms/r/ruleof72.asp
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These examples are for illustrative purposes only and are not intended to predict the returns of any investment choices. Rates of return will vary over time, particularly for long-term investments. There is no guarantee the selected rate of return can be achieved.
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