From Cynthia Scott of OMC Financial Services:
Can the Rule of 72 help you plan your investment needs?
**What is it? The Rule of 72 is a simplified way to determine how long it will take your investment to double.
**The formula is take your initial investment and determine what interest rate you believe you can earn
**Divide that return into 72 and that determines the years that it will take to double your initial investment.
**For example at 5% expected rate of return will take approximately slightly over 14 years to double
**Additional money added to the investment will change the number of years; however, if you calculate your expected return into the Rule of 72 each January it will give you some direction
**Two reasons for using the Rule of 72 in your investment strategy is:
>>You may have to adjust the amount of money you are saving based upon the expected return and the amount of your current investment
>>If you are not meeting the required amount of money you will need in the future, it may require you to adjust your asset allocation.
