What is the Rule of 72? Here's how it works: Divide 72 by your expected annual interest rate (as a percentage, not a decimal). The answer is roughly the number of years it will take for your money to double. For example, if your investment earns 4 percent a year, it would take about 72 / 4 = 18 years to double.
The Rule of 72 is an easy way to calculate how long an investment will take to double in value given a fixed annual rate of interest. Dividing 72 by the annual rate of return gives investors an estimate of how many years it will take for the initial investment to duplicate.
The rule of 72 is only an approximation that is accurate for a range of interest rate (from 6% to 10%). Outside that range the error will vary from 2.4% to 14.0%.
Einstein also said that “If people really understood the Rule of 72 they would never put their money in banks.” Suppose that a 10-year-old has $500 to invest. She puts it in her savings account that has a 1.75% annual interest rate.
The average age of a millionaire is 49 years old, which means it takes them over 27 years of saving and investing to reach this status. This may seem daunting, but the truth is, it's never too late to start.
However, the Rule of 72 is based on a few assumptions that may not always be accurate, such as a constant rate of return and compounding period. It also does not take into account taxes, inflation, and other factors that may impact investment returns.
To answer the question of how to double my money quickly, simply invest in a portfolio of investment options like ULIPs, mutual funds, stocks, real estate, corporate bonds, Gold ETFs, National Savings Certificate, and tax-free bonds, to name a few.
Before buying an item, figure out how many times you'll use it. If it breaks down to $1 or less per use, I give myself the green light to buy it.
Let's say that you start with the time frame in mind, hoping an investment will double in value over the next 10 years. Applying the Rule of 72, you simply divide 72 by 10. This says the investment will need to go up 7.2% annually to double in 10 years. You could also start with your expected rate of return in mind.
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.
Final answer:
It will take approximately 15.27 years to increase the $2,200 investment to $10,000 at an annual interest rate of 6.5%.
It is the smallest Achilles number, as it's a powerful number that is not itself a power. 72 is an abundant number. With exactly twelve positive divisors, including 12 (one of only two sublime numbers), 72 is also the twelfth member in the sequence of refactorable numbers.
Buy $4000 worth of goods at wholesale, resell them with a 150% markup. Pay your taxes. Done. Invest some of the money in tools and supplies and provide a service.
One of those tools is known as the Rule 72. For example, let's say you have saved $50,000 and your 401(k) holdings historically has a rate of return of 8%. 72 divided by 8 equals 9 years until your investment is estimated to double to $100,000.
If you start with 1 dollar and double it every day for 30 days, you would have approximately $1,073,741,824. This shows the concept of exponential growth. Like the penny example, this is not typically possible in real-world investing scenarios.
The theme of the rule is to save your first crore in 7 years, then slash the time to 3 years for the second crore and just 2 years for the third! Setting an initial target of Rs 1 crore is a strategic move for several reasons.
This rule is based on the principle of compounding interest and suggests that if you invest in a mutual fund with a 12 per cent annual return, your investment will double approximately every 8 years. After the first doubling, it will double again in the next 4 years, and then a final time in the subsequent 3 years.
The classic approach to doubling your money is investing in a diversified portfolio of stocks and bonds, which is likely the best option for most investors. Investing to double your money can be done safely over several years, but there's a greater risk of losing most or all your money when you're impatient.
While becoming a millionaire after 40 requires effort and sacrifice, it's possible in less than a decade through smart budgeting, higher earnings, disciplined saving and calculated risk taking.
Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you're in the top 1% if you earn $819,324 or more each year.