How to Double Your Money with the Rule of 72

Imagine you’re saving your allowance or birthday money, and you want to figure out how long it will take for your savings to grow and double. There’s a simple math trick called the Rule of 72 that can help you figure this out quickly. Let’s break it down.



What Is the Rule of 72?

The Rule of 72 is a super-easy way to see how long it will take for your money to double if you invest it and earn interest. All you need to do is divide the number 72 by the interest rate (the percent of extra money you earn each year). The answer tells you how many years it will take for your money to grow to twice as much.

For example:

  • If your money grows at 6% interest each year, you divide 72 by 6.
    • 72 ÷ 6 = 12 years.
      So, it will take 12 years for your money to double.

How Does It Work?

Think about this like planting a tree. If you plant a money tree and it grows at a steady speed (interest rate), the Rule of 72 helps you guess how many years it will take to have two trees instead of one!


Let’s Look at Some Examples

Here are some fun examples to show you how it works:

  1. You find a savings account with 8% interest.
    • 72 ÷ 8 = 9 years.
      In 9 years, your $100 turns into $200.
  2. You invest in something earning 10% interest.
    • 72 ÷ 10 = 7.2 years.
      In just over 7 years, your $100 becomes $200.
  3. A slow-growing investment gives you 4% interest.
    • 72 ÷ 4 = 18 years.
      You’ll wait 18 years to see your $100 double.

Why Is This Useful?

The Rule of 72 is like a shortcut. Instead of using a calculator or learning tricky math, you can figure out how long it takes for your money to grow with just one simple division.


What If There’s Inflation?

Inflation is when things like candy bars or video games get more expensive over time. If inflation is 3%, the Rule of 72 can tell you how long it will take for prices to double too.

  • 72 ÷ 3 = 24 years.
    That means in 24 years, prices might be twice as high!

Remember These Cool Things About the Rule of 72

  1. It’s easy to use for interest rates between 6% and 10%.
  2. It works best when your money grows steadily.
  3. It helps you plan your future savings goals.
  4. It even works in reverse! If you know how long you want to double your money, you can figure out the interest rate you need.

Let’s Recap

The Rule of 72 is like a magic trick for your money. Divide 72 by the interest rate to see how long it takes for your money to double. Start saving now, and watch how time (and a little math) can help your money grow! 😊

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