RULE OF 72

Want to know what your money will earn over time?

1. Take the amount of money you have (lump Sum)
2. Divide interest rate that you are drawing into the number 72
3. The number will be how long it will take that money to double
4. Divide that number into the number of years that you have until you want to use that money (retirement)
5. Then double the original lump that many times

This will tell you real close as to the amount of money you will have over the stated number of years until retirement

Example

• $1,000......lump Sum
  
• 6%..........cd rate of return
  
• age 30-retire at age 66
  
• 72 divided by 6% = 12-that money will double in 12 years
• retiring at age 66 and current age 30 means that 12 divided into 36 year = 3 x 3
• $ 1.000 will triple in that time frame.
• The original $ 1,000 will become $8,000 at age 66

Example

Mutual fund drawing average of 12% over same time period

72 divided by 12% = 6 years that money will double 6 times over the next 36 years. The original $1,000 will now be $64,000

Does interest matter?