Rule of 72 is a simplified estimation of how long it takes for an investment to double given a fixed interest rate. It comes in especially handy when you have to make a guess on how long it takes and you do not a calculator on hand to perform any calculations. The Rule of 72 is used for compounding interest.
To use the Rule of 72, all you have to do is to divide 72 by the amount of fixed interest rate to approximate how long it takes for the investment to double. For example, if an investment offers a fixed interest of 5%, it will take 72 / 5 = 14.4 years for the investment to double. If the fixed interest rate is 3%, it will take 24 years for the investment to double.
Monday, February 2
Subscribe to:
Post Comments (Atom)
Posts
0|comments
Post a Comment