The rule of 72 dictates that to be able to compute the approximate number of years for your money to double, simply divide 72 by the interest rate.
72 / interest rate = approximate no. of years it will take for your money to double.
Let’s take the example of having a Savings Account in any commercial bank with the current prevailing interest rate of 1%.
Say I put a 100k in Metrobank under savings account which gives 1% pa interest. How many years will it take for my money to become 200k? Using the rule of 72, we use
72 / 1% = 72 years for my money to double
So if I’m 29 years old, by the time I reach 101 years old, my money will become approximately P200,000.00. By that time, most likely, I’ll be 6 feet under.
Likewise, if I’ll invest the same money in a mutual fund that gives an average return of 12%, my money will double when I’m 35 years old or in a period of 6 years.
|Rate of Return||Rule of 72||Actual # of Years||Difference (#) of Years|
Interesting, isn’t it? The power of time and money.
Latest posts by Garry De Castro (see all)
- Cashalo Mobile App Launched – Aims to Unlock Financial Access to Filipinos - October 24, 2018
- BPI Depositors Reported Mysterious Account Transactions - June 7, 2017
- How to be the Best Stock Investor in 2017 - February 14, 2017
- 4 Things I Learned About Rich People by Chinkee Tan - November 24, 2016