Rule of 72

"The Rule of 72 is a mental shortcut to estimate the effect of compound interest. Simply, by dividing 72 by an interest rate, you can estimate how long it will take for your funds to double. In formula form:
Years to Double = 72 / Interest Rate
For example, if an investor currently has their nest egg invested in certificates of deposit (CDs) yielding 2%, it will take that individual 36 years (72 / 2) to double their retirement account. By comparison, if the person invested in a diversified portfolio earning 8% over time, their funds would double in 9 years (72 / 8)."  But don't forget that inflation also eats away at purchasing power; you can estimate the impact of inflation with the same rule.  Thanks to the Networth Advisory Group for this info. Read more examples at:
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Rule of 72
Rule of 72
Reviewed by jembe
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