The Rule of 72: The Power of Compounding Interest

This is probably one of the basic yet very useful concepts that every Filipinos should know, the Rule of 72. Learning this simple formula let's one get an in depth overview of how your money works for you. It will answer questions such as:

  • How long will it take me to double my money if I earn X%?
  • What return must I earn if I wish to double my money in X years?
The Power of Compounding Interest
Double your money
Albert Einstein called compound interest the eight wonder of the world and mankind’s greatest invention, because it is the mightiest force ever unleashed for the amassing of wealth. 

How does it Works?

The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at 12 percent interest, divide 12 into 72 and you get 6 years.

If you're a parent reading this article, I recommend you show this video to your kid/s explaining in simplest possible way the concept of Rule of 72.

How I wish my parents could have thought me this formula by the time they started giving me my allowance or how I hoped my math teacher could have included this in one of our math lessons in school. Learning this basic concept could have given me the opportunity to take advantage of a valuable asset - my TIME! 

1 comment:

  1. I agree - this should have been in our curriculum while we were still studying! :)


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