Does Money Double Every 7 Years - How Is This True?
In order to double your money, Rule 72 provides a simple mental calculation procedure.
Author:James PierceReviewer:Camilo WoodOct 09, 202360 Shares59.7K Views
In order to double your money, Rule 72 provides a simple mental calculation procedure. You may have found additional helpful formulae for calculating the length of time it will take for your money to double, or you may have come up with your own scenarios for how to do so. It's possible to get answers to your queries and double your money by using the rule 72 formula. Let's have a look at this rule 72 for multiplying your money.
What Is The 72nd Rule?
The Rule of 72 tells you how to invest your money to get a guaranteed yearly return of two times your original investment. To calculate the time it will take for an investment to double in value, divide 72 by the annual rate of return.
In other words, the 72-year rule teaches you exactly how to double your money with a high degree of certainty and without a lot of risk in just about seven years, if not less.
The rule of 72 is a mental calculation, but additional formulae exist in Excel and spreadsheets that tell you how long it will take for your money to double. To find out whether money doubles every seven years, you may use the rule of 72. And if so, what steps should be taken?
Calculating Your Doubled Money Using The 72-Rule
The following formula may be used to determine how often money doubles in value every seven years:
Years to Double = 72 / Interest rate
To find out whether money doubles every seven years, look at the following part of the formula:
Interest Rate = Rate of return on an investment
As a point of comparison, you may check out:
If the ROI is 6%, then If you want to know how long it will take for your money to double, divide 72 by 6 percent:
Years to Double = 72 / Interest rate
Time money doubles = 72 / 6 % = 12
As a result, after 12 years, your money will have doubled in value thanks to an investment yield of 6%.
If the ROI is 7%, then: If you want to know how long it will take for your money to double, divide 72 by 7%.
Years to Double = 72 / Interest rate
Time money doubles = 72 / 7 % = 10.2
You'll have doubled your money in only 10.2 years if you put 7% of your money into an investment.
If you want to know how long it will take for your money to double, divide 72 by the ROI of 8 percent as follows:
Years to Double = 72 / Interest rate
Time money doubles = 72 / 10 % = 7.2
With a 10% return on your investment, your money will double in 7.2 years.
Using The Rule 72 For Your Money
How to multiply money using the Rule of 72 is explained here:
According to the 72-year rule, if the rate of return on investment or interest rate is 8%, the money will double in 9 years. In this example, we're using an annual compound return of 8%, but we've put it down as 8% rather than 0.08, so it will take us nine years to double our money.
Therefore, the following rule 72 formula is derived from a simple logarithmic calculation and certain sophisticated functions in that logarithmic calculation by calculating the natural log of values.
Conclusion
At gatherings and around the Thanksgiving table, doubling your money is sometimes used as a badge of pride. In addition to overzealous consultants or worse, scammers and fraudsters, false promises to quadruple one's money are common. A portion of our investor mentality that craves fast cash may be to blame for our desire to double our money.
James Pierce
Author
Camilo Wood
Reviewer
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