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The Rule of 72: How to Double Your Money in 7 Years


Published on 2024-12-06 23:43:31 - U.S. News & World Report
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  • While the rule of 72 is a useful rule of thumb to estimate investment returns, using an online calculator or a compound growth formula may yield more accurate results.

The article from U.S. News & Money discusses the Rule of 72, a simple mathematical formula used to estimate the number of years required to double the invested money at a given annual rate of return. By dividing 72 by the expected rate of return, investors can get a rough estimate of how many years it will take for their investment to grow twofold. For example, at a 6% annual return, it would take approximately 12 years (72 divided by 6) for an investment to double. The article explains that while the Rule of 72 is not perfectly accurate for all rates of return, it provides a quick and easy way to understand the effects of compound interest. It also highlights the importance of understanding this rule for making informed investment decisions, adjusting for inflation, and considering the impact of taxes on investment growth. Additionally, the article touches on the limitations of the rule, suggesting that for more precise calculations, especially at very high or low rates of return, other methods might be more appropriate.

Read the Full U.S. News & World Report Article at:
[ https://money.usnews.com/investing/articles/the-rule-of-72 ]