Rule of 72

The following is a good segment from NPR. Now if they would just tell me how I could get a guaranteed 8% interest rate for 40 years!

NPR : Resolving to Retire with a Nest Egg

The Rule of 72

Steve Mariotti, the founder and President of the National Foundation for Teaching Entrepreneurship, says one of the most crucial lessons for retirement saving is the “rule of 72.”

This is a quick mathematical formula for figuring out how long it will take your money to double at a given interest rate. What you do is divide 72 by the interest rate and that tells you how many years it will take your money to double:

72 / interest rate = time for money to double

So, if you’re earning 8 percent interest, 72 divided by 8 equals 9 years. At 7 percent it’s around 10 years.

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