Use The Rule of 72 to Double Your Money
If you want to know how much growth you need to expect from your stock portfolio in order for it to double in "X" number of years, the easy method for calculating this is to use the Rule of 72.
The calculation is quite simple. You merely take the number 72 and divide it by the percentage growth rate of your portfolio during any year. And while the result may not be precise, it is close enough to count. And what's more, it is a fast and easy way of estimating.
Anyone who uses the Rule of 72 will find that it's a good idea to recalculate the doubling time annually, based on the return for the previous year. The process of recalculating will help an investor to stay on target with his/her original goal.
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The calculation is quite simple. You merely take the number 72 and divide it by the percentage growth rate of your portfolio during any year. And while the result may not be precise, it is close enough to count. And what's more, it is a fast and easy way of estimating.
Anyone who uses the Rule of 72 will find that it's a good idea to recalculate the doubling time annually, based on the return for the previous year. The process of recalculating will help an investor to stay on target with his/her original goal.
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posted by Bob Moser at
7:18 PM
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