When interest is compounded annually, a single amount will double in each of the following situations: The Rule of 72 indicates than an investment earning 9% per year compounded annually will double in 8 years.
How many years will it take my money to double?
The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years.
How many years will it take you to double your money if your rate of return is 7% annually?
The Rule of 72 states that the amount of time required to double your money equals 72 divided by your rate of return. For example: If you invest money at a 10 percent return, you will double your money every 7.2 years.
How long will it take for an investment to double at 6% per year?
Accuracy of the Rule of 72
For example, the actual doubling time for an investment with a 4% annual return is log (2) / log (1+4%) = 17.7 years, not 18 years. The actual interest rate required to double an investment in 6 years is 21/6 – 1 = 12.2%, not 12%.
How long does it take for 401k to double?
For example, if you invest $10,000 at 10 percent compound interest, then the “Rule of 72” states that in 7.2 years you will have $20,000. You divide 72 by 10 percent to get the time it takes for your money to double. The “Rule of 72” is a rule of thumb that gives approximate results.