Discussion Forum Forums Investments Rule of 72

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    Rule of 72 is a quick and reasonably good estimate to determine how long a particular investment can double its value. It assumes a fixed annual rate of return. The formula is simply taking 72 divided by the annual rate of return.

    Example:
    I expect an annual return of 5% for my investment, it would take 72/5 = 14.4 years for me to double the value. You can use the online calculator from moneychimp.

    Please note that rule of 72 is not so accurate at low interest rate (below 3%) and at high interest rate (above 50%). Thus, anything in between (3%-50%) should be fairly accurate. Here are some rough estimates for various securities:

    Source: http://www.bigfatpurse.com/2008/02/rule-of-72/

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