Rule of 72 Compound Interest

Online Guide to
The Rule of 72
& Compound Interest

Learn How to Invest with Elliott Wave Analysis
Rule of 72 Compound Interest
Rule of 72 (n. - definition) - a simplified method to calculate the length of time that it takes money to double at a certain interest rate.
Rule of 72 Compound Interest


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by Retirement Plans Advisor

How should you manage your retirement money in a BEAR Market?

The "Rule of 72" is a simple, quick and easy way to calculate the length of time in which money doubles at a certain interest rate. To find the length of time in which money doubles at 6%, divide 72 by 6 and you get 12 years. At 12% money doubles in 6 years. The following interest rate calculations (doubling) illustrates the impact of doubling at these different rates.

When you consider that mathematical factor and then make the necessary adjustments to the investable amount and the rate of growth adjusted for taxes on the investment you'll be well on your way to understanding the investment process; and be far better able to select the "correct" investment tax structure for your assets, i.e, retirement plans, tax deferred investment accounts, charitable trusts and the like. Visit Elliott Wave Investers for a money manager that focuses on the power of compound interest.

Future Values at Different Growth Rates Assuming a one time LUMPSUM $10,000 Initial Investment at the beginning of Year #1:

Years
Hence

Initial Investment

12

24

36

48
3%
Growth

10,000

15,000

20,000

30,000

40,000
6%
Growth

10,000

20,000

40,000

80,000

160,000
12%
Growth

10,000

40,000

160,000

640,000

2,560,000


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Copyright © 1998-2007. Rule of 72 and Compound Interest Information Guide. All rights reserved.

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