Shh! Don’t tell anyone what I’m about to tell you. It’s a long-kept secret among the financial fraternity and they’d kill me for telling you.
The Rule of 72.
There are a lot of different ways to use it, but the most common is as follows:
If you get a 10% annual return on your money, you will double your money in 7.2 years.
If you get a 7.2% return, your money will double in 10 years.
Getting a 3.6% return? Your money will double in 20 years.
For you math nerds the formula is:
72 / X% = years to double
It also works in reverse. If inflation is 3.6% annually, in 20 years your money will be worth half what it is today. Eek!
The math isn’t exact, but surprisingly close.
But let’s keep that between you and me.
