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The Rule of 72 allows you to determine how long it will take for money to double at various interest rates.
It works like this: Say you want your money to double in 10 years. To determine how much interest you need to earn, just divide 72 by 10. Therefore, in order for your money to double in 10 years, you must earn 7.2% annually. If you earn 15% and want to know how long it will take to double your money, just divide 72 by 15. The answer: 4.8 years.
So, simply divide whatever number you have—either the interest rate or the time—into the number 72, and the answer will be the number you need. If you divide the interest rate into 72, you’ll get the time. If you divide the time into 72, you’ll get the interest rate. What fun!
Ric Edelman is Founder and Executive Chairman of Edelman Financial Services, LLC, a Registered Investment Advisor, and an Investment Advisor Representative who offers advisory services through EFS and is a Registered Representative and Registered Principal of, and offers securities through, EF Legacy Securities, LLC, an affiliated broker/dealer, member FINRA/SIPC.
From the book The Truth About Money (Fourth Edition) by Ric Edelman. Copyright ©1996, 1998, 2000, 2004, 2010 by Ric Edelman, Edelman Financial Services LLC. Reprinted by permission of Harper Business, an imprint of HarperCollins Publishers.
It works like this: Say you want your money to double in 10 years. To determine how much interest you need to earn, just divide 72 by 10. Therefore, in order for your money to double in 10 years, you must earn 7.2% annually. If you earn 15% and want to know how long it will take to double your money, just divide 72 by 15. The answer: 4.8 years.
So, simply divide whatever number you have—either the interest rate or the time—into the number 72, and the answer will be the number you need. If you divide the interest rate into 72, you’ll get the time. If you divide the time into 72, you’ll get the interest rate. What fun!
Ric Edelman is Founder and Executive Chairman of Edelman Financial Services, LLC, a Registered Investment Advisor, and an Investment Advisor Representative who offers advisory services through EFS and is a Registered Representative and Registered Principal of, and offers securities through, EF Legacy Securities, LLC, an affiliated broker/dealer, member FINRA/SIPC.
From the book The Truth About Money (Fourth Edition) by Ric Edelman. Copyright ©1996, 1998, 2000, 2004, 2010 by Ric Edelman, Edelman Financial Services LLC. Reprinted by permission of Harper Business, an imprint of HarperCollins Publishers.
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The Truth About Money 4th Edition
<p style="LINE-HEIGHT: normal; MARGIN: 0in 0in 0pt" class=MsoNormal><span style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">“A single source for what you need to know to put your financial house in order, an impressive piece of work, and very useful.”—Bob Clark, Editor-in-Chief, Dow Jones Investment Advisor<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p><p style="LINE-HEIGHT: normal; MARGIN: 0in 0in 0pt" class=MsoNormal><span style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><o:p> </o:p><p style="LINE-HEIGHT: normal; MARGIN: 0in 0in 0pt" class=MsoNormal><span style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Ric Edelman, America’s most successful financial advisor, has revised and updated his classic personal finance bestseller to reflect the new global economic outlook. In his 4th edition of The Truth About Money, Edelman tells you everything you need to know about money—an essential, yet delightfully breezy and accessible, must-read manual for anyone who may have previously sought the financial wisdom of Suze Orman and Jean Chatzky. The Truth About Money is an indispensible guide to money matters from the man whom Barrons named the #1 independent financial advisor in the country.<o:p></o:p>
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