A rule stating that in order to find the number of years required to double your money at a given interest rate, you divide 72 by the compound return . The result is the approximate number of years that it will take for your investment to double. For example, if you want to know how long it will take to double your money at 12% interest, divide 72 by 12 y ou get six years.
Rule of 69
If you are inclined to do a slighly more involved calculation, a more accurate rule of thumb is the rule of 69. According to this rule, the doubling period = 0.35 + 69/ Interest rate
Hence , if the interest rate is 12%, the doubling period = 0.35 + 69/12 = 6.1 years
Contributed by:
Veena Vishwanathan
Globsyn Business School
No comments:
Post a Comment