th (19)The ‘Rule of 72’ is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself. For example, the rule of 72 states that $1 invested at 10% would take 7.2 years ((72/10) = 7.2) to turn into $2.  Let’s take a look at a real life example. I have a client who’s retirement account totals $253,500. He earned 8.6% on his money last year. In 8.4 years his money will double to $506,000 and in 17 years his money will grow to $1,012,000 assuming the same 8.6% annual return. The power of compound interest works!

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