Financial Literacy – Rule of 72 Formula Continued
Rule of 72 Formula
If we wanted to calculate how much interest rate is needed to double our cash given a number of years...
Here’s the Rule of 72 Formula for that:
Interest Rate Needed to Double Your Cash Based on the Number of Years Left to Save
72 ÷ Years Left to Save = Interest Rate Needed
If we had $10,000 and 20 years to save, then the interest rate we need is 3.6% interest rate to double that $10,000 to $20,000.
Let’s say we had 12 years left to save, in that case it is, 72 ÷ 12 = 6% Interest Rate is needed to double our money.
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