August 26, 2011
The Rule of 72
Hey Fashionable and Financially Aware People!
Its Finance Friday Time again! Sorry it’s been soooooo long since we’ve had one of these. Nonetheless, Today’s Finance Friday Topic is The Rule of 72.
Albert Einstein likes to call this the 8th Wonder of The World, and I might have to agree with him. Simply put, The Rule of 72 is the way to determine the amount of time it will take an investment double (using a fixed annual rate of interest).
When you take the number 72 and divide it by the interest your investment is earning annually, you will determine the amount of time it takes for your money to double. The time is usually quantified by years.