Quick Answer: Who Created The Rule Of 72?

Where does rule of 72 come from?

The Rule of 72 – Why it Works

You can think of this as The Rule of 69 (multiplying the .69 by one hundred, so that the interest rate can be expressed as a percent instead of a decimal).

It isn’t an estimate – it’s the exact answer for doubling your money, assuming that the interest is compounded continuously.

What is the 72 rule formula?

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.

Where did the rule of 70 come from?

Simply stated, the “rule of 70” says that the number of years it takes for an amount growing at x % per year to double is roughly equal to 70/x. So, in the example above if 70/x = 10 years, (it took ten years for house prices to double) then x = 7%. As I said, a no-brainer to calculate using the rule of 70.

Does Rule of 72 include compounding?

Variations in Applying the Rule of 72

For example, the rate of 11% annual compounding interest is 3 percentage points higher than 8%. The basic rule of 72 says the initial investment will double in 3.27 years.

Why do we use 72 in the Rule of 72?

The Rule of 72. This formula is useful for financial estimates and understanding the nature of compound interest. To double your money in 10 years, get an interest rate of 72/10 or 7.2%. If your country’s GDP grows at 3% a year, the economy doubles in 72/3 or 24 years.

Does money double every 7 years?

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. If you invest at a 7 percent return, you will double your money every 10.2 years.

What is the Rule of 72 calculator?

Divide 72 by the interest rate to see how long it will take to double your money on an investment. It is a useful rule of thumb for estimating the doubling of an investment. This calculator provides both the Rule of 72 estimate as well as the precise answer resulting from the formal compound interest calculation.

What is the rule of 72 examples?

The rule of 72 is a method used in finance to quickly estimate the doubling or halving time through compound interest or inflation, respectively. For example, using the rule of 72, an investor who invests \$1,000 at an interest rate of 4% per year, will double their money in approximately 18 years.

How can I double my money in 5 years?

This is the number of years it will take for your money to double. For example, if your money is earning an 8 percent interest rate, you’ll double your money in 9 years (72 divided by 8 equals 9). Or, if your money is earning a 5 percent interest rate, you’ll double it in 14.4 years (72 divided by 5 equals 14.4).

What is the 70/30 rule?

THE 70/30 RULE OF COMMUNICATION. There is an old rule that is familiar to many but practiced and mastered by only a few of the best sales people. It is called the 70/30 Rule of Communication. That means that the sales person is actually doing more listening during the sales call than anything else.

What is the rule of 42?

In finance, the rule of 72, the rule of 70 and the rule of 69.3 are methods for estimating an investment’s doubling time. The rule number (e.g., 72) is divided by the interest percentage per period (usually years) to obtain the approximate number of periods required for doubling.

What is the 70 rule in house flipping?

What is the 70 percent rule? The 70 percent rule states that an investor should pay 70 percent of the ARV of a property minus the repairs needed. The ARV is the after repaired value and is what a home is worth after it is fully repaired.