The Rule of 72

When you spend a dollar today, you’re giving up about $16 that could be yours 36 years from now.

The “Rule of 72” is a well-known rule of thumb.

The Rule of 72 estimates the number of years required to double your money at a given interest rate. Just take a hypothetical rate of return, say 8% — divide 72 by eight and you get nine. The Rule of 72 says that at 8% your money will double every nine years.

That means a dollar invested at 8% today will be worth $2 after nine years, $4 after 18 years, $8 after 27 years, and $16 after 36 years.

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