Rule of 72 Example

Posted by Grace under Investing on January 18, 2016

Here is the rule of 72 example. The rule of 72 can be your guide on how and when to double your money. Enjoy this example of rule of 72 computations to get an idea on how to double your initial investments.

Many people are finding ways to double their money. They find ways to invest. They believe investing can help them to  make their money grow. The use the internet to search the best place to invest money. They use the internet to search investment opportunities. Yes, they all want to get rich. However, they don’t know how does investing really works.

The Rule of 72

The rule of 72 is a simple formula indicating the number of years and interest required to double your money. If you want to double your money in stocks in five years, your stocks portfolio should earning 14.4 percent each year.

Formula: 72 divided by the number of years you want to make your money doubled. The answer is the “required interest” to earn per year.

The Rule of 72 Example

List of rule of 72 example. Analyze the given data below to have an idea how does the rule of 72 works;

• 72/3 = 24%
• 72/5 = 14.4 %
• 72/10 = 7.2%
• 72/15 = 4.8%

Example, John Doe invests his \$10,000 in the stock market. His goal is to double his money after 5 years. What is the required interest? The answer is 14.4%. John Doe will achieve his goal (to double his money) if his investments will earn 14.4% per year within 5 years.

The rule of 72 example above indicates that the few years you want to double your money, the required interest is high. If the years were extended, the required interest is low. That’s why, if you want to double your money as soon as possible, be willing to take high risks types of investments.

I hope you liked this rule of 72 example. Do not forget to share this page with your friends so that they will have also an idea about the use of the rule of 72.