investing

6 financial formulas to help you succeed

Formula No. 6: How long to double your money
72 ÷ R (the annual interest rate of the investment) = Years to double investment

This "Rule of 72" helps you quickly compare the returns from different interest rates, taking into account the effect of compounding.

If you have a sum of money now, you can quickly estimate how much it will grow to be in the future. For example, if you take $10,000 and invest it at 5 percent, then this rule of thumb tells you it will take about 14.4 years to double your money.

"That helps people think about how long they'll need to work. It makes a good starting point for evaluating your current situation," says Golden.

Sachs cautions that there's a drawback to focusing on return: "What if you met your target return but not your financial goals?" He suggests deciding on your goals first and then building a portfolio that can meet those goals with the least amount of risk.

advertisement

          Connect with us
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

CDs and Investment

Need to invest $3K for the long term?

Dear Dr. Don, What's the best place to invest $3,000 for the long term? I'm interested in earning the best rates with low or no fees. Thanks, -- Cheryl Compounds Dear Cheryl, You've got (at least) three questions to... Read more

advertisement

Blog

Dr Don Taylor

Frugal living to build wealth?

What I'm not sure if we should admire Read for the size of his estate or feel sorry for him because he didn't use his wealth during his lifetime for life goals.  ... Read more

Partner Center
advertisement

Connect with us