The Rule of 72

During my late night reading yesterday, I was reminded of something which I learnt from another book some time ago. I'd like to share it here as I find this pretty useful. Developed by mathematicians, The Rule of 72 illustrates the power of compounding.

Divide 72 by the rate of return of any investment and the answer you get is the approximate number of years it takes for that investment to double in value.

For instance, if you invest $50,000 at a return of 2%, it will take 36 years before it grows to $100,000. But if the same $50,000 is invested at a higher yield of 6%, it will take just 12 years to multiply your money to $100,000. With this formula, at least I'll know how many % yield I should be looking at when I invest :)

Hope you find this info useful too.