Build Wealth with the Rule of 72

If you’re like most people, then you’d probably like to double your money. Who wouldn’t, right? Well, believe it or not, through something known as the “rule of 72,” you can double your money without a lot of risk all in the span of about seven years.   

Just in case you’re not familiar with it, the rule of 72 basically says that the amount of time it will take to double your money is equal to 72 divided by your rate of return.

So, essentially, if you invest in an index fund and don’t withdraw the money, you could expect returns of about 9.61% every year, allowing you to double your money in just a little over 7 years. Sounds pretty good, right?

With that said, though, there are always going to be unexpected variations in the market from time to time. If, though, you can stay on track and not change your strategy no matter what happens, you’re very likely to double your money in the amount of time given. Consistency is key; don’t sell when the market gets shaky, no matter how scary it may be. The law of averages says that, even if things get rocky for a while, you are still likely to come out on top.

Of course, recent trends are changing things a bit, making it look like, now, it’s likely to take a little longer to double money, perhaps ten years since annualized returns are likely to go to about 7%. Even ten years, though, is not that bad, and you’ll still see a nice increase in your funds.

It’s up to you whether this is an investment strategy you can live with or not, but the rule of 72 has helped many people, and if you try it out and stick to it, there’s a very good chance it could work for you too.