The Rule of 72

The Rule of 72 is a fast and easy way to determine has fast your money will double. All you do is divide the number 72 by the interest rate that you project to earn. It will demonstrate that higher rates of return will double tremendously faster. Let me illustrate:

Years	4%	6%	12%
0	100,000	100,000	100,000
6			200,000
12		200,000	400,000
18	200,000		800,000
24		400,000	1,600,000
30			3,200,000
36	400,000	800,000	6,400,000

As you can see, 2% is very important when considering your investments. Just a note to consider when thinking about your investments…here are the statistical averages of the S&P 500.

Years Yield 1871-2005 9.40% 1926-2005 11.00% 1945-2005 11.60% 1980-2005 13.90%

Plug those numbers into the rule of 72 and you can see the power of investing properly. The moral of the story…you need to start saving today!!!