ET Online|
1/5
How fast can your money grow?
Getty Images
2/5
Want to double your money? Follow this rule
Getty Images
3/5
How rule of 72 works
Getty Images
Getty Images
5/5
How rule of 114 works
Getty Images
ET Online|
1/5
Getty Images
2/5
Getty Images
3/5
Getty Images
Getty Images
5/5
Getty Images
Here's how the
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 long will it take to double your money if you invest it at a rate of 8% compounded annually? ›Let's say your interest rate is 8%. 72 ∕ 8 = 9, so it will take about 9 years to double your money.
How long would it take for an investor to double his money? ›Here's the formula:
Years to double your money = 72 ÷ assumed rate of return. Consider: You've got $10,000 to invest and you hope to earn 8% over time. Just divide 72 by 8—which equals 9. Now you know it'll take approximately 9 years to grow your $10,000 to $20,000.
The Rule of 72
The rule says that if you divide 72 by your growth rate, you'll get the number of years it will take to double your money -- and vice versa.
Very few investors know how long it takes to double their money. Rule of 72 can be of help. Divide 72 by the expected rate of return and the answer is the number of years required to double your money. For example, if a bond offers 6 percent rate of interest per year, then you will double your money in 12 years.
Will my money double in 5 years? ›Alternatively you can calculate what interest rate you need to double your investment within a certain time period. For example if you wanted to double an investment in 5 years, divide 72 by 5 to learn that you'll need to earn 14.4% interest annually on your investment for 5 years: 14.4 × 5 = 72.
How long will it take for an investment of $1000 to double? ›Expert-Verified Answer
Under continuous compounding at an annual interest rate of 6.5%, it will take approximately 10.67 years for an initial investment of $1000 to double in value.
The classic approach of doubling your money involves investing in a diversified portfolio of stocks and bonds and is probably the one that applies to most investors. Investing to double your money can be done safely over several years but there's more of a risk of losing most or all of your money if you're impatient.
How quickly do investors want their money back? ›In the early stages of a startups life, investors expect to see a return of 3 to 5 times their initial investment within 5 to 7 years. However, this is only a rough guideline, and actual returns will vary depending on the company, the stage of the company, and the amount of risk the investor is willing to take.
So, if the interest rate is 6%, you would divide 72 by 6 to get 12. This means that the investment will take about 12 years to double with a 6% fixed annual interest rate. This calculator flips the 72 rule and shows what interest rate you would need to double your investment in a set number of years.
How long will it take for an investment to double in value if it earns 5% compounded continuously? ›Final answer:
To determine the time for an investment to double with a 5% interest rate compounded continuously, the formula t = (ln(2))/0.05 is used, resulting in approximately 13.86 years.
The calculation can help you visualize your money. For example, an investment with a 3% annual interest rate will take about 24 years to double your money. On the other hand, an investment with a 4% yearly rate of return will take around 18 years.
How long does it take a 5% investment to double? ›Rate of Return | Rule of 72 # of Years to Double Money | Logarithmic Formula # of Years to Double Money |
---|---|---|
4% | 18.0 | 17.7 |
5% | 14.4 | 14.2 |
6% | 12.0 | 11.9 |
7% | 10.3 | 10.2 |
How the Rule of 72 Works. For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years ((72 ÷ 10) = 7.2) to grow to $2. In reality, a 10% investment will take 7.3 years to double (1.107.3 = 2). The Rule of 72 is reasonably accurate for low rates of return.
How long will it take to double $100 at 4 interest? ›The Rule of 72 is a calculation that estimates the number of years it takes to double your money at a specified rate of return. If, for example, your account earns 4 percent, divide 72 by 4 to get the number of years it will take for your money to double. In this case, 18 years.
Author: Catherine Tremblay
Last Updated:
Views: 6445
Rating: 4.7 / 5 (47 voted)
Reviews: 94% of readers found this page helpful
Name: Catherine Tremblay
Birthday: 1999-09-23
Address: Suite 461 73643 Sherril Loaf, Dickinsonland, AZ 47941-2379
Phone: +2678139151039
Job: International Administration Supervisor
Hobby: Dowsing, Snowboarding, Rowing, Beekeeping, Calligraphy, Shooting, Air sports
Introduction: My name is Catherine Tremblay, I am a precious, perfect, tasty, enthusiastic, inexpensive, vast, kind person who loves writing and wants to share my knowledge and understanding with you.