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RULE OF 72
The "Rule of 72" is a formula that helps answer the question, "How many years will it take my money to double?" based on a hypothetical constant rate of return. The following formula will help you determine this number: 72 divided by the annual rate of return equals the approximate number of years needed to double your money.
For example:
You have a savings account with $500 deposited in it and it earns 4% interest from the credit union. 72 divided by 4 is 18. It will take 18 years for your $500 to double to $1,000 if you don't make additional deposits.
The Rule of 72 is a mathematical concept and does not guarantee investment results or function as a predictor of how your investment will perform. It is simply an approximation of the impact a targeted rate of return would have. Investments are subject to fluctuating returns and there is no assurance that any investment will double in value.
Make an appointment with an LPL Financial Representative for assistance with your long-term financial planning.
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