Rule of 72 – The Doubling Effect
“Rule of 72” is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to double.
For example, the rule of 72 states that $1 invested at 10% will take 7.2 years (72➗ 10 = 7.2) to grow to $2.
Every $200,000 will grow to $800,000 in 16 years’ time at 9% compounded yearly. $800,000 will give you $40,000 retirement income @ 5% withdrawal rate. There will be $3,333 a month of lifetime income,
You will not outlive your money and you can still leave an estate for your loved ones.
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