Rule of 72 | Time To Double Your Money 💵

Welcome to Erin Talks Money - Money Minutes. The Money Minutes series is where I tackle some of your biggest money questions in just a few minutes.

Yes we are all hard pressed for time these days, so let’s break it down to the bare necessities in this video.

How long will it take to double my money?

The idea of doubling your money is always appealing…and it’s a common enough money question that they actually have a formula for it.

If you want to know how long it will take to double your money all you have to do is:

72 / interest rat = time to double your money

Keep in mind that the time to double your money is calculated in years.

It is worth noting that this formula is not perfect. It gives you an approximation of the time necessary to double your money at the stated interest rate.

There are also some important limitations to the formula worth mentioning. First and foremost, it does not work with all interest rates….it only works for interest rates of 4% to 18%.

Also, it works only for consistent interest rates and doesn’t have the ability to factor in if you are continuing to make contributions to your investment. So for those reasons if may not be a fantastic tool when it comes to gauging when your stock market investments will double. As you are probably still making regular contributions and the stock market certainly does not have a guaranteed consistent return rate.

However, even with it’s limitations I do feel that it can be a useful guide. In as much that it give you an expected timeframe in which your money will double. No it is not gospel, but it is better to have some sort of timeframe to work with.

So how long do you think it will take to double your money?

Disclaimer: Please note that this video is made for entertainment purposes only and not to be taken as financial advice. Always make sure to do your own research.

Interested in starting your investing journey, head on over to Vanguard or Fidelity and open your account today, it will only take 10 min to open up your account.

#Networth #investing #personalfinance

[sireagle]

I’m a math nerd. I love the rule of 72. It is always nice to be able to approximate when your money will double. I which it didn’t break down at 18% as I’m getting well above that number. I do my projections/simulations in excel anyway and it enables me to predict my potential increases. Another awesome and informative video. Please keep them coming. 😊

[inea-fijourney]

thank you for sharing. I love this sort, to the point videos. Very informative.

[tonyflaminio]

Erin,
You research your topics well. I must say as a Huge fan of the Rule of 72. I didn’t know about it’s limitations. I feel it does a wonderful job of getting folks to realize the power of time in the market. I tell people all the time about what that last doubling of their money looks like in their account. Start saving/investing now. Also you can point out what a fee from an financial advisor may cost them.
Thanks for sharing.

[nevrock]

This is why you want to start saving early. The younger the better. The idea is to double your money as many times as you can. An 18 year old will probably get to double their money one more time than a 26 year old.

[TradingWithCJ]

Its a very cool rule!!! Never really thought about it before tbh!

[ELIFI]

This sounds like something financial advisors made up to confuse people in order to just go with them to manage their money LOL. I think it is fairly useful as a "quick and dirty" general guideline, but there are so many calculators out there to get a bit more specific. Either way, this is great content and very helpful!

[dionangelini]

Very cool! Interesting way to forecast. Would you be calculating dividends or just stock growth?

[khalilsarwan]

hey Erin, love your videos, any chance you do a really long videos? like 1 hour or something?
kind of hate searching for a different video every time, will be nice to just open a video and stay on it for a long time.
thank you!

[AvadaKedavra]

Inflation is like 15% per year. Monetary inflation is like 40% per year….

[michaelandersen]

How about the rule of 7 10. Seven percent it takes ten years or ten percent it takes Seven years.

[ironuckles]

What’a your take on politicians trying to impose a “wealth tax”? Will this make the stock market crash? Will US be like Japan where there has been flat economic growth for decades and stocks don’t even beat inflation?