Rule of 72: How long does it take to double your savings

Since I am a lender I mostly write about lending and the cost of money. But I do have a banking background and everyone who is buying a home needs to save for the down payment. Here is a formula that will help in answering the question, "How long will it take to double my money?"

The formula is the Rule of 72. Divide the interest rate into 72. If the annual interest rate is 10% then 72/10 = 7.2- the answer is 7.2 years. Interest rates are annual. A couple of more.

6%  would be 72/6 = 12 years
3% would be 72/3 = 24 years

With today's interest rates being low it takes quite a while but this is good to know. I encourage those who can to build their 401k plans especially when there is a matching fund and to build IRA accounts.

One of the things we forgot in this country is that savings should be a part of all earnings. Almost everyone can save. Even if you already own a home or never plan on owning a home; routine consistant savings will improve your sleep index tremendously.

Doug Jones
Mortgage Magic
NMLS 286668