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The Rule of 72 can be a helpful guide in targeting a goal for
your return and determining which investment is fitting to you. It
assists you in estimating the number of years it takes to
double your investment.
Based on the Rule of 72, a one-time contribution of $2,000 doubles six
more times at 12% than at 3%. To calculate, divide 72 by the percent of
interest that your investment earns. And consider how many
doubling periods you are likely to have before you reach your goal. |
| The
Rule of 72 |
|
72
10 |
= |
7.2 |
percent
rate of
return |
|
years
to
double |
|
Rate
of Return |
| Age |
3% |
6% |
12% |
| 19 |
$2,000 |
$2,000 |
$2,000 |
| 25 |
. |
. |
$4,000 |
| 31 |
. |
$4,000 |
$8,000 |
| 37 |
. |
. |
$16,000 |
| 43 |
$4,000 |
$8,000 |
$32,000 |
| 49 |
. |
. |
$64,000 |
| 55 |
. |
$16,000 |
$128,000 |
| 61 |
. |
. |
$256,000 |
| 67 |
$8,000 |
$32,000 |
$512,000 |
| Effective
rate of return compounded annually, rounded to the nearest $1,000.
This table serves as a demonstration of how the Rule of 72 works and is
only an approximation of accumulations. It is for illustrative
purposes only and does not take taxes or applicable fees into account and
does not represent an actual investment. |
|
|
 |
The CPA.
Never Underestimate The Value. |
|
Before applying anything you read to your business or personal
situation, you should contact us.
Site questions: contact mail@crownpoint.net
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