There is an important concept pertaining to the power of compound interest called the “Rule of 72”. It’s an easy way to calculate how long it’s going to take for your investment to double.The Rule of 72 was discovered by the mathematical genius Albert Einstein who once said that “Compound Interest is the most powerful force in the universe!”
Here’s how the Rule of 72 works. You take the number 72 and divide it by the investment’s rate of return. The result is the approximate number of years, it’ll take for your money to double.
Let me explain the rule of 72. To make it easier for you to follow, I posted a graphic example of the rule below.
My example is based on a one time deposit of $10,000:
* If you invest $10,000 that grows at 3% over 48 years: divide 72 by 3 and you get 24.
This means your money will double every 24 years. In 48 years it will compound to $40,000.
* If your $10,000 grows at 6% over 48 years: divide 72 by 6 and you get 12.
This means your money will double every 12 years. In 48 years it will compound to $160,000.
* If your $10,000 grows at 12% over 48 years: divide 72 by 12 and you get 6
This means your money will double every 6 years. In 48 years it will compound to $2,560,000.
The higher the interest rate, the more times the accumulate amount will double and at the same time compound.
If YOU deposited $10,000… What amount would you want to receive after 48 years,
$40,000… $160,000… or $2,560,000???
If you need to know more about the rule of 72, contact Salim (jannahinc@gmail.com) or Hadidah (hadidah@gmail.com) and will be more than happy to help you.
