Sunday, February 25, 2007

The Rule of 72

For those of you who like to calculate compound interest in your head here is an article that discusses and will calculate the famed Rule of 72.

The Rule of 72 helps determine roughly how many years it will take an investment to double in value at a certain interest rate. For example a investment paying a 10% annual return will double in a little over 7 years (72 / 10 = 7.2). Those of you more mathematically inclined can crunch the numbers in your head but this calculator gives you the real answer as well (7.27). If you are really excited about the Rule of 72, the site also has an article explaining why the equation works... be warned the why section gives a very technical explanation and made my head hurt personally.