Naturally, any of us would love to double our money — and then, perhaps, double it again and again. Clearly, this can be done, and many people have done it, but you might be assuming that you’re not the kind of person who can.
Nonsense. You don’t need to be a savvy stock market operator in order to harness the market’s power to make you richer. Here’s how you can go about doubling your money.
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The Rule of 72
It all boils down to math: Doubling your money is a function of how rapidly your money grows in value, and the time in which it grows. The Rule of 72 can help you see how money doubles: Per the rule, if you divide 72 by your growth rate, you’ll get the number of years it will take to double your money. You can also divide 72 by the number of years in order to get the annual growth rate needed to double your money. Check it out:
|
Growth Rate |
Years to Double |
|---|---|
|
2% |
36.0 |
|
3% |
24.0 |
|
5% |
14.4 |
|
7% |
10.3 |
|
10% |
7.2 |
|
12% |
6.0 |
|
15% |
4.8 |
|
20% |
3.6 |
|
25% |
2.9 |
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Source: Author calculations.
|
Years to Double |
Growth Rate |
|---|---|
|
3 |
24% |
|
4 |
18% |
|
5 |
14.4% |
|
6 |
12% |
|
7 |
10.3% |
|
8 |
9% |