The Rule of 72 Explained: How to Double Your Money Every 5 Years

Rule 72: You Need to Know This!
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Do you want to learn a way to quickly work out how much money you'll make from an investment? (hint: rule 72)

Then the rule of 72 is what you need.

This should be in every investor's toolkit, and it's actually very easy to memorize.

The rule of 72 explained:

If you divided the number 72 by the rate of return (or rate of growth) as a percentage, you'll get an estimation of how many years it'll take for your money to double.

For example, if you expect an investment to give you a rate of return of 10% each year, on average, then this is what the rule of 72 means for your investment:

72 / 10 = 7.2 years.

At 10% a year, your money doubles every 7.2 years.

Then, after another 7.2 years, it'll double again, giving you 4x your initial investment! That's extremely powerful.

Now, there is a stock which I have recently bought, which I expect will double my money in 5 years.

It's called Parker Hannifin. It's a dividend king with an incredible 63 years of consecutive dividend increases.

The best part is that it increases its dividends very quickly (13% each year over the last 10 years). That means that I expect a rate of return of over 15%, as I'm also getting a dividend yield of 3.2%.

Watch the video for more details! ;)

DISCLAIMER: I am not a licensed investment advisor, and today's video is just for entertainment and information. This video is NOT investment advice. Please ALWAYS do your own due diligence before making any financial decisions.

#rule72 #dividends #doubleyourmoney

[GenExDividendInvestor]

Thanks, great to know about the Rule of 72 for doubling portfolio size... and then another interesting thing to explore is the time it takes your dividend income to double ;)

[trevorhassel]

Rule of 72 is an important rule for all investors! I needed a refresher on this though, glad i found this video. Just subscribed! I look forward to more of your content!

[StockInvestmentAnalysis]

All hail the dividend king! That was an awesome video. I try to be conservative with my overall portfolio growth goal and hope to double it every 10 years (72/7) just based on average historical market growth. Of course I want to beat that, but I try to keep the goal more conservative.

[karhukivi]

It's actually the "Rule of 69" but using 70 or 72 makes the calculation easier with some loss of accuracy - not good to decimal places. This is continuous compounding but banks etc. might apply less frequent compounding periods such as months or years. Handy as a quick mental arithmetic method but don't expect this from investments!

[stevenbury]

>12% a year = real estate (especially HMOs and BRRR method). Also ANY stocks (atm).

[MRZEROTOINFINITY]

Rule 72 comes in handy when trying to calculate the doubling effect 👍 Awesome vid 👍😎