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Does Money Double Every 7 Years?

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The “rule of 72” tells us that money doubles about every 7.2 years. To calculate this figure, you divide 72 by the assumed return rate, which is 10% per year. In other words, it takes seven years for a $10,000 investment to double. However, the rule is not a foolproof formula.

Investing isn’t as simple as many people make it out to be. A lot of factors can impact your earning potential. For example, inflation is a factor in how fast money will double. But even with inflation, this rule can be used to calculate the amount of time it takes to double your money.

The Rule of 72 can help you decide between risk and reward. For instance, you can compare two investment choices: a low-risk investment yielding 2 percent and a high-risk investment yielding 10 percent. Young adults typically choose high-risk investments so they can take advantage of multiple doubling cycles, while older investors are more likely to stick to lower-risk accounts. While the Rule of 72 is useful for calculating the length of time until money doubles, it is not accurate for every investment situation. It is important to hire a financial advisor if you want to meet specific financial goals.

If you’re looking for ways to invest your money, it is wise to invest it in stocks rather than bonds. While bonds may offer greater safety in the short-term, stocks tend to produce higher returns over the long-term.

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