Obviously, we could have used the equation to calculate each of these examples, but I figured the table would be easier. We can also use a future value calculator or the actual future value formula to verify that these numbers are accurate, but we don’t have to. This method works. It...
This formula is useful forfinancial estimatesand understanding the nature of compound interest. Examples: At 6% interest, your money takes 72/6 or 12 years to double. 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,...
\frac{72}{10} = 7.2\% How to Use the Rule of 72 — Some Examples The Rule of 72 has a number of useful applications where you can calculate growth at a compounded rate. For example, if you want to estimate how long it would take for the gross national product (GDP) to double, ...
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Read on to see examples how we can use the “Rule of 72” to predict when we’ll be able to grow our money by 100%, effectively doubling our investment money. What is the Rule of 72? Yes, the “Rule of 72” is a math formula, but don’t be intimidated by it because it’s ...
In these examples, the Rule of 72 only works if there is a constant inflation rate. Let us hope that inflation soon returns to the percentages that we have all become accustomed to over the last few years. [1] Find out more about Luca Pacioli atUniversity of St Andrews ...
Examples of How to Use the Rule of 70 At a 3% growth rate, a portfolio will double in 23.33 years because 70/3 = 23.33 At an 8% growth rate, a portfolio will double in 8.75 years because 70/8 = 8.75 At a 12% growth rate, a portfolio will double in 5.8 years because 70/12 =...
Let’s work out a few examples together. If you were to invest let’s say $5,000 at two percent, it would take 36 years for it to double to $10,000. (72 divided by the interest rate of two percent = 36 years). Pretty pitiful, right. This is why when the GIC rates were so...
The “rule of 72” is an exciting concept associated with Compound interest. It can be used to determine the time it will take for a sum of money to double if we know the interest rate. Similarly, it can also be used to determine the rate of interest required for an amount of money...
The Rule of 72 provides a simple method to estimate the time in years it takes for an investment to double at a fixed annual interest rate. This rule simplifies the process of determining the doubling time by taking the number 72 and dividing it by the annual interest rate....