The Rule of 72?
3 Pages Posted: 30 May 2014
Date Written: May 28, 2014
Abstract
The Rule of 72, a staple in financial circles for estimating the amount of time required for an investment to double in value, is shown to be quite inaccurate at today's high rates of return. The derivation of the Rule of 72 provides insight into how the rule can be improved. A new rule of thumb, which provides a very high level of accuracy, is obtained by a simple regression.
Keywords: Future value, Rule of 72, Regression, Retirement wealth, Saving
Suggested Citation: Suggested Citation
Spitzer, John and Singh, Sandeep, The Rule of 72? (May 28, 2014). Journal of Financial Counseling and Planning, Vol. 10, No. 1, 1999, Available at SSRN: https://ssrn.com/abstract=2442924
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