Law of 72

Law of 72

The Law of 72 says that if you divide 72 by the percent return on investment you expect, then the result is the number of years it will take four your initial amount to double.

For example:

Law 72

If assume 10% rate of return then it will take 7.2 years to double.

So, if you have $1000 today, in 7.2 years invested at 10% you will have $2000 ignoring taxes, cost of investment, etc.

Some other examples:

72/10% = 7.2 years to double

72/7.5% = 9.6 years

72/5% = 14.4 years to double

72/2.5% = 28.8 years

72/1.25% = 57.6 years

Magic Law of 72

Law of 72

Take the constant (72) and divide it by the (rate of return) to find out how many years it will take your money to double.

* 72 divided by 4 = 18
* 72 divided by 6 = 12
* 72 divided by 8 = 9
* 72 divided by 10 = 7.2
* 72 divided by 15 = 4.8

Which would you rather have?

Compare $10,000 invested over 20 years growing at different interest rates:

* 4% = $22,005
* 6% = $32,610
* 8% = $48,295
* 10% = $71,478
* 15% = $189,942

What if I saved money?

Take it a month at a time,
$200 invested each month for 20 years.

* 4% = $71,830
* 6% = $90,241
* 8% = $114,686
* 10% = $147,349
* 15% = $287,708

Your total contributions $47,200