Investment bites: The rule of 72
Investing bites is a series of short-one idea posts. This is not an investment recommendation.
I found out recently that my 60’s dad has not heard about the rule of 72. My, impossible! You can find at least 600,000 websites mention! On this little magical rule!
Sorry, lots of exclamation marks already in this post – l will move to academic mode now. 72 rule is a quick way to count how soon you can double up the initial money when invested (and reinvested). You need to know or assume the expected return.
Pretty simple on a FD. At a yearly return of 2%, it would take 72/2 = 36 years to double up your money.
For a investment with expected return of 15%, it would take 72/15 = 4.8 years to double up your money.
For trading with expected return of 40%, it would take 72/40 = 1.8 years to double up your money. (Better than lottery eh)
I have personally not made a 40% yearly gain but you can actually find these traders and copy them at no cost in EToro. 😮
How much returns are you looking for while investing?
Unsure of how much to invest? Check out The 36 rule