What is the Rule of 72?

The rule of 72 is a tool investors can use to determine how long it will take for a given investment to double in value over time given a specified investment return.

Lets look at an Example: 

Investing $10,000 in a product that produces a 12% return means your investment will double in 6 years.

72/12=6

Over time, this money will grow exponetially.

Example:

$10,000 invested today and earning 12% assuming all dividends are reinvested over the next 30 years would double ever 6 years (72/12=6) or 5 times (60/6=5) over the next 30 years.

$10,000 becomes 20k, then 40k, then 80k, then 160k then $320,000

This is the power of compounding...and is incredibly powerful over time 

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