How Long It Takes To Double Your Money Using The 72 Rule

When you put your money in the right ways, thanks to the power of compound interest it can grow substantially over time. It might even double, even when you don't have to do a thing.

Want to figure out how rapidly your money will grow? The "Law of 72" is approximately how many years it will take to double your income, with a fixed rate of return.

A lower interest rate can give you enough to nail your goals with more time. With less time, you may need a higher interest rate.

The calculation is simple: 72 / interest rate= years to double

Consider plugging into different interest rates from the different accounts the money is in, from deposit and money market accounts to index and mutual funds.

For eg, if your account earns:

1%, it will take 72 years for your money to double (72/1= 72)

3%, it will take 24 years for your money to double (72/3= 24)

6%, it will take 12 years for your money to double (72/6= 12)

9%, it will take 8 years for your money to double (72/9= 8)

12%, it will take 6 years to double your money (72/12= 6)

If you have extra savings, you're probably better off keeping it up to 2.69 percent in a high-yield savings account or deposit certificate, both of which offer significantly higher interest rates.

If you're saving your money in the stock market, you'll potentially see even greater returns. Over the last 90 years, the average annualized total return for the S&P 500 index is 9.8 percent. Adjusted for inflation, the annual return is still around 7% to 8%. When you gain 7 percent, in just over 10 years the income will double.

You can also use the 72 law to add credit card debt, a car loan, home mortgage, or student loan interest rates and work out how many years the income would take to double for someone else.

The average interest rate on credit cards, for example, is 17.3%. You get 4.16 years if you split 72 by that amount. That is all it takes for a business with a credit card to earn twice your salary. The higher the interest rate, the more it owes the borrowers.

If you have debt, explore the possibility of refinancing your car loan or mortgage to get a lower rate of interest.