How long until my money doubles???

Geoff Cook - CFP, CHAIP

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Someone asked me the other night "Hey Mr.Cook, how long will it take to double my money?"...



Now one would think that this is a question that is impossible to answer...However there is actually a very simple formula you can use that will give you an approximate amount of time.
The formula is called The Rule of 72, and it is very simple.
You simply take 72 and divide it by a rate of return.
The Answer is the amount of time in years it will take to double your investment.

EXAMPLE.

Deposit : $10,000
Rate of Return: 10%
You simply take 72/10 = 7.2 years.
It will take you roughly 7.2 years earning a 10% return to turn $10,000 in to $20,000, and 7.2 more years to turn $20,000 in to $40,000.

Let me set up a scenario.

$10,000
1) $20,000
2) $40,000
3) $80,000
4) $160,000
5) $320,000
6) $640,000
7) $1,200,000
8) $2,560,000
9) $5,120,000

Here is money being doubled nine times. Using our example from before:
7.2 years multiplied by the 9 times that your money will double = 65 years.
Using this formula you can turn $10,000 in to $5,120,000 if you have 65 years and a rate of return of 10%.
Remember the Rule of 72 works for any rate of return for any amount of years.

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When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

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