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%.
On the flip side, the “rule of 72” can also apply to credit card debt. Just like the accelerated growth on your savings, the same thing can happen—in the opposite direction—when debts compound. And credit card providers typically charge interest rates higher than 10%.
Here is how it works:
Your credit card has a 25% actual percentage rate (APR) and you have a $1,000 charged to the card. You take 72 and divide 25%, 72/25 = 2.88. This means that in 2.88 years, the $1,000 charge would double to $2,000.
50% goes towards necessary expenses. 30% goes towards things you want. 20% goes towards savings or paying off debt.
Try Flipping Things
Another way to double your $2,000 in 24 hours is by flipping items. This method involves buying items at a lower price and selling them for a profit. You can start by looking for items that are in high demand or have a high resale value. One popular option is to start a retail arbitrage business.
The rule is this: 72 divided by the interest rate number equals the number of years for the investment to double in size. For example, if the interest rate is 12%, you would divide 72 by 12 to get 6. This means that the investment will take about 6 years to double with a 12% fixed annual interest rate.
Focus on one debt at a time.
Start with the credit cards or loans with the highest interest rate and make the minimum payments on your other cards. Or, start with the debt you can pay off the quickest if you need the boost of satisfaction that comes from wiping a loan off your books.
Many seniors are “judgment proof,” which means their income is derived from retirement, Social Security, or other accounts that can't be garnished. Debt collectors may not bother to take seniors in this situation to court, since they're unlikely to get the money that way.
This approach typically involves negotiating with credit card companies to settle your debt by making a single lump-sum payment that's lower than your current balance. However, debt forgiveness isn't a simple fix, and careful consideration is necessary before pursuing this route.
A fair settlement offer typically falls between 30% and 50% of the total amount owed. However, it's imperative to note that this can vary based on several factors, including how delinquent the account is.
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. It is a reasonably accurate estimate, especially at low interest rates.
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 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.
Key Takeaways. There aren't any free government debt relief programs for credit card or personal loan debt other than bankruptcy. Many types of government debt relief exist in the form of grants and low-interest loans for specific purposes.
Bankruptcy. Bankruptcy is another legal option that can help you stop paying credit cards. It helps individuals and businesses that can't afford to pay off their debts by evaluating and using their assets to pay off outstanding debts.
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%.
To potentially turn $10k into $100k, consider investments in established businesses, real estate, index funds, mutual funds, dividend stocks, or cryptocurrencies. High-risk, high-reward options like cryptocurrencies and peer-to-peer lending could accelerate returns but also carry greater risks.
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.
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.
Trading options is one of the fastest ways to double your money — or lose it all. Options can be lucrative but also quite risky. And to double your money with them, you'll need to take some risk. The biggest upsides (and downsides) in options occur when you buy either call options or put options.