Double Your Money
Have you ever looked at your savings account statements and wondered how long would it take to double your money at interest rates mentioned on those statements? By using a simple formula, you will be able to figure it out very fast.
This simple formula is called The Rule of 72. The rule works when your interest rate is compounded annually and you are not taking out any money or interests from your account. To find out how long it will take to double your money, take your interest rate and divide 72by your interest rate. Yes, 72is the magic number here. Let's say your high interest savings account is paying you 3% interest, divide 72 by 3 and it comes to 24 years. If you add more money every month to your capital, your money will double in lesser years. If you have a mutual fund which returns roughly 10% annually, your money will double in 7.2 years. Don't be discouraged by these long years. Investment is a discipline and you should not expect miracles to happen overnight.
First Published: Apr 17, 2007 ADawnJournal.com