Rule of 72
Do you know the Rule of 72? It's an easy way to calculate just how long it's going to take for your money to double.
Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.
As you can see, a one-time contribution of $10,000 doubles six more times at a 12 percent return than at 3 percent.
| Years | 3% | 6% | 12% |
|---|---|---|---|
| 0 | $10,000 | $10,000 | $10,000 |
| 6 | $20,000 | ||
| 12 | $20,000 | $40,000 | |
| 18 | $80,000 | ||
| 24 | $20,000 | $40,000 | $160,000 |
| 30 | $320,000 | ||
| 36 | $80,000 | $640,000 | |
| 42 | $1,280,000 | ||
| 48 | $40,000 | $160,000 | $2,560,000 |
How many doubling periods do you have in your life?
This table serves as a demonstration of how the Rule of 72 concept works from a mathematical standpoint. It is not intended to represent an investment. The chart uses constant rates of return, unlike actual investments which will fluctuate in value. It does not include fees or taxes, which would lower performance. It is unlikely that an investment would grow 10% or greater on a consistent basis, given current market conditions.
Investing entails risks, including loss of principal. Units, when redeemed, may be worth more or less than their original value.
In Canada, term life insurance and Common Sense Funds segregated fund products are underwritten by Primerica Life Insurance Company of Canada. Mutual Funds offered by PFSL Investments Canada Ltd., mutual fund dealer.