How Long to Double Your Money? A Simple Equation May Provide the Answer

Learning the Rule of 72 Gives You a Simple Guide for How Long It Could Take to Grow Your Investments

In a world in which the value of a dollar seems to shrink each day, wouldn’t it be nice to have a quick, easy-to-understand rule of thumb that calculates the time needed to double your money?

Say hello to the Rule of 72. Even for investors who aren’t particularly fond of math, it’s hard to beat the Rule of 72 for its sheer simplicity. 

Here’s the formula:
Years to double your money = 72 ÷ assumed rate of return.

Consider: You’ve got $10,000 to invest and you hope to earn 8% over time. Just divide 72 by 8—which equals 9. Now you know it’ll take approximately 9 years to grow your $10,000 to $20,000.

A lower assumed rate of return adds years to the timetable while a higher rate does the opposite. 

Of course, the denominator in this simple equation represents an assumption about the rate you expect to earn. Your actual rate of return will likely vary significantly (unless you have a crystal ball!) since markets are unpredictable. 

That said, if you’re trying to decide whether to invest in stocks, bonds, or cash, you can use the Rule of 72 to see how long it could take to potentially double your money using historical returns (FIGURE 1 and FIGURE 2). 

Along with using the Rule of 72, your financial professional can help you choose a mix of investments that potentially offer the best chance of meeting your investment goals.

Disclaimer

“Bloomberg®” and any Bloomberg Index are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by Hartford Funds. Bloomberg is not affiliated with Hartford Funds, and Bloomberg does not approve, endorse, review, or recommend any Hartford Funds product. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to Hartford Fund products.

Important Risks: Investing involves risk, including the possible loss of principal. 

Source: https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/how-long-to-double-your-money-a-simple-equation-may-provide-the-answer.html?ite=7818&ito=3289&itq=e5c177ef-0f1a-44af-8ab1-8bf1d6bcb865&itx%5Bidio%5D=15395414