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How To Double Your Money Every 6 Years
Double your money, fast! Do those words sound like the tagline of a get-rich-quick scam? If you want to analyze offers like these or establish investment goals for your portfolio, theres a quick-and-dirty method that will show you how long it will really take you to double your money. Its called the rule of 72, and it can be applied to any type of investment. (For more ideas on how you can double your money, check out 5 Ways To Double Your Investment.)
TUTORIAL: Investing 101
How the Rule Works
To use the rule of 72, divide the number 72 by an investments expected annual return. The result is the number of years it will take, roughly, to double your money. For example, if the expected annual return of about 2.35% (the current rate on Ally Banks 5-year high-yield CD) and you have $1,000 to invest, it will take 72/2.35 = 30.64 years for you to accumulate $2,000.
Depressing, right? CDs are great for safety and liquidity, but lets look at a more uplifting example: stocks. Its impossible to actually know in advance what will happen to stock prices. We know that past performance does not guarantee future returns. But by examining historical data, we can make an educated guess. According to Standard and Poors, the average annualized return of the S
