Sunday, August 3, 2014

Rule Of 72 : The Rule Of Seeing Double

Many years back, I remember seeing some article/book talking about a way to calculate how fast (or slow) our money can be doubled with certain Annual Rate Of Return (in %). I've forgotten the exact rule but today I've chanced upon it again in one of the advertisement in Sunday Times. So, I thought just to blog about it to share (but I believed most of you might have already known) and as a reminder to myself.  

It is called RULE OF 72

To simply put, you take 72 and divide by the annual rate of return, you will get the number of years it takes to double your money. 

For example :

Money Invested             : $1,000
Annual Rate Of Returns : 10%

It will take 7.2 years to grow your money into $2,000

The formula = 72 /10
                   = 7.2 Years

It is simple enough but quite a magical one!



  1. Use this Rule to set your Investing Goals and revise your strategies periodically to align with this Rule to reach your goals.

    You say important or not. No need for reminder. The Rule has to be part of you now. LOL!

    1. CW8888, very true... I should have internalized it by now ;-)

  2. I feel the issue is most investors track their absolute gains of their individual stock holdings rather than their whole stock portfolio performance in terms of CAGR. They would never know if their own stock picking outperform the index.

    1. Agreed with you on the portfolio performance thingy, but once we are able to track the individual stock, it is a matter of consolidating the assessment..


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