Do You Know About the Rule of 72? — “Napkin Finance”

I never knew about this rule. How cool! It's funny, because my Ally savings account interest rate is .5% and according to this rule it would take 144 years for my money to double. 🙂

Well, that's rather discouraging with today's interest rates! I do love how they used 6% as an example.

You can also plug in your average rate of returns for your investments. Hopefully that's much higher than .5%!

I had no idea about this...so cool!  Thanks for sharing!

Great reminder.  Now to put the concept to work for me.  Thanks.

wow thanks for sharing i love learning on this community

Had no idea regarding this...awesome. Thank you for this information.

@lismox posted:

I never knew about this rule. How cool! It's funny, because my Ally savings account interest rate is .5% and according to this rule it would take 144 years for my money to double. 🙂

You are correct...Unfortunately putting it in the Banks is not the way to go..

The rule of 72 sounds very interesting...Regarding how I'm doing with my financial goals.... well, I'm having a little trouble leaving the starting block.  🙁 I'm still working on it though.

Lots of comments below about low bank interest rates.  Same is similar for bonds (very low rates of return right now - but better than banks).  There is a need to invest at least a "good" portion of your savings in the equity market (i.e. the stock market).  If you are in it for the long run and invest in a broadly held globally diversified large pool of stocks (like an Index fund), you will diversify your risk and be much more likely to get towards the 6% returns used in the above Napkin Finance example.  Emphasis on the long run and for things like funding your retirement.  Be careful of waking up at age 65 having had all your money/savings in the bank earning close to zero interest and not even keeping up with the inflation rate over the prior 30-40 years.  Inflation for planning purposes over the long haul should be about 3% or so.

The rule of 72 is totally cool , it is simple cool and effective in retirement income planning also  .  Thank you Chantal Voltaire

My money goal so far this year  is a bit bumpy I paid off one of my  debt last week I guess in the debt department I am doing better but in the saving department it could be better  Chantal Voltaire

Congrats on paying off one of your debts, @Chantal Voltaire!

It's good to be reminded about the rule of 72. I knew about it but never quite remember how it works. I'm taking a screen shot of your explanation, Nicole, and putting in my budget folder. Thanks.