This simple formula tells you how long it will take for your money to double—while you sit back and relax (2024)

FAQs

This simple formula tells you how long it will take for your money to double—while you sit back and relax? ›

Do you know the Rule of 72? It's an easy way to calculate just how long it's going to take for your money to double. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.

The Rule of 72 is a calculation that estimates the number of years it takes to double your money at a specified rate of return. If, for example, your account earns 4 percent, divide 72 by 4 to get the number of years it will take for your money to double. In this case, 18 years.

The Rule of 72 is a simplified formula that calculates how long it'll take for an investment to double in value, based on its rate of return. The Rule of 72 applies to compounded interest rates and is reasonably accurate for interest rates that fall in the range of 6% and 10%.

With compound interest, you could expect to double your money in approximately 9 years, while it would take 12.5 years with simple interest. The power of compound interest lies in reinvesting your returns, allowing your money to grow exponentially over time.

Number of years to double the money = 72 / Interest Rate

It is a reasonably accurate formula and more so while using lower interest rates than higher ones. If your money is kept in a savings account that earns just 4%, it will take 18 years to double your money.

Imagine that we have a population growing at a rate of 4% per year, which is a pretty high rate of growth. By the Rule of 70, we know that the doubling time (dt) is equal to 70 divided by the growth rate (r). That means our formula would look like this: dt = 70 / r.

The classic approach of doubling your money involves investing in a diversified portfolio of stocks and bonds and is probably the one that applies to most investors. Investing to double your money can be done safely over several years but there's more of a risk of losing most or all of your money if you're impatient.

Do you know the Rule of 72? It's an easy way to calculate just how long it's going to take for your money to double. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.

The Rule of 72 predicts how long an investment will take to double based on a fixed annual interest rate. The rule is this: 72 divided by the interest rate number equals the number of years for the investment to double in size. For example, if the interest rate is 12%, you would divide 72 by 12 to get 6.

What is the doubling money trick? ›

The Rule of 72 is not precise, but is a quick way to get a useful ballpark figure. For investments without a fixed rate of return, you can instead divide 72 by the number of years you hope it will take to double your money.

The quickest way to double your money is fold it in half and put it back in your pocket. That's from fellow Oklahoman and hero Will Rogers. But I had other personal heroes that taught me to save too.

The formula for simple interest is SI = P × R × T / 100, where SI = simple interest, P = principal amount, R = the interest rate per annum, and T = the time in years.

The Rule of 72 is a simple way to find out.

The Rule of 72 calculates the number of years it takes an investment to approximately double in value. You simply divide 72 by any average annual growth rate and you'll have the number of years it would take to approximately double in value.

The number of years it takes for a certain amount to double in value is equal to 72 divided by its annual rate of interest.

This means that the investment will take about 12 years to double with a 6% fixed annual interest rate. This calculator flips the 72 rule and shows what interest rate you would need to double your investment in a set number of years.

It's an exponential growth function. y = 2^(x-1) where x is the day - starting with 1 penny on day 1 - and y is the number of pennies you would have on that day. Or you can just take a calculator, enter .

The value 72 is a convenient choice of numerator, since it has many small divisors: 1, 2, 3, 4, 6, 8, 9, and 12. It provides a good approximation for annual compounding, and for compounding at typical rates (from 6% to 10%); the approximations are less accurate at higher interest rates.