The Rule of 72
2 Pages Posted: 30 Jul 2014
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
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