What is The Rule of 70?

by Pam on September 30, 2009

There are all kinds of interesting things you can learn about investing and economics.  The Rule of 70 is one such fascinating tidbit that might be of interest to you.

What is the rule of 70?If you want to be able to estimate approximately how long it will take for your money to double in an investment with a set interest rate or a fixed rate of return, you can get a fairly good idea by dividing the number 70 by your fixed interest rate.

For example, if you are currently earning 1% in your savings account, that means it would take 70 years for your money to double.  If you are earning 2%, it would take 35 years to double your money, and if you are earning 3%, it would take 23 years.

Although the Rule of 70 isn’t perfect, it does provide a good indication of how long it will take for your money to double.  Note that the interest rate must be fixed in order to do this calculation.  So, if you have any investments with an annual compound interest rate, do this calculation to see how long it would take for your money to double.

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