The Rule of 72

Once you are saving money, you have to get a return. Even in Matthew 25 we see that a return is important. (And yes, those talents are a monetary unit - see Exodus 38:24 and for a more thorough explanation, but I digress). Anyway, how long will it take your money to double?

Enter the "Rule of 72". My dad (THANKS DAD!!!) started teaching me about compound interest when I was about 10. And the easiest rule of thumb to figure out compound interest is to divide 72 by the rate (e.g. 10%apr), and that is how many years it will take your money to double (7.2 years in this case). Pretty handy huh?

So at 5%

72/5=14.x (since it is just an estimating technique, I won't bother with the decimal.)

It takes 14+ years to double what you have invested.

Caveats: - works for compound interest only (simple interest would be 100/rate). And it isn't perfect, but it provides a quick easy way to see what compound interest does.

cool huh? I've enoyed it since I was 10.

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