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How Money Works Educator - Jack Akopikyan

Jack Akopikyan

HowMoneyWorks Educator

500 N. Central AVE.
Suite 650
Glendale, CA 91203

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The Rule of 72

Abracadabra!It's not a magic trick–it's the mental math shortcut everyone on Earth should know.

Free Chapter

Download the entire Rule of 72 chapter from "HowMoneyWorks, Stop Being a Sucker".

Click the confirmation link in the email you receive.

How It Works

The Rule of 72 is a simple formula that can be used to approximate the number of years it will take for your money to double.

You simply divide 72 by your interest rate.

Presto.

Like magic, the result is the number of years it will take your money to double.

72 ÷ interest rate = years to double

Mei understands the value of The Rule of 72

Estimating doubles can help simplify money decisions. This is a practical formula.

It's All About The Interest Rate

The higher your interest rate, the fewer years it takes your money to double.

Select an interest rate:

  • 1%

  • 3%

  • 6%

  • 9%

  • 12%

72 ÷1% =72 years to double

Will you retire a millionaire?

How many times does your money need to double for you to have $1 million by the age of 67?

TJ's Example

TJ'sExample

Sarah's Example

Sarah'sExample

TJ has $50,000

I'm 32 and I have about $50,000 in my retirement fund at work.

OK, TJ, let’s say you don’t add any more money to your retirement fund. How many doubles do you need to have $1 million when you turn 67 years old?

Stack of cash
TJ pointing at a calculator

Simple math. I got this. After one double I’d be at $100k, then $200k, $400k, $800k… so about 4 doubles, right?

Correct, TJ! With only 35 years left until retirement, your money will have to double every...

TJ smiling

…8 years! That's some fast doubling. What kind of rate of return would I need to get a double every 8 years?

You’d need a 9% rate of return, because 72 divided by 9 equals 8. That’s the growth you need to become a millionaire by retirement.

Formula showing 72 divided by 9 equals 8
TJ throwing a dart

Wow. 9% is higher than I would have guessed. I’ll need my financial professional to help me aim at that. But at least I know the target now—and as my dad says, “you'll never hit a bullseye with your eyes closed.”

Good thinking, TJ. And good luck using the Rule of 72 to shoot straight.

Sarah smiling

I’m a few years older than TJ. OK—more than a few. I’m about to turn 50 if you must know. If I have about $250k in savings, what interest rate do I need to have $1 million by the time I’m 67?

That’s only 2 doubles, Sarah. $250k to $500k, and then $500k to $1 million. See if you can use the Rule of 72 to figure it out…

Stack of cash
Sarah looking happy about doubling her money

Fine. Let’s see. At 49 years old, I have 18 years before I turn 67. Since my money needs to double twice, it has to double every 9 years. That’s pretty straightforward. Now what do I do?

You’ve almost got it. The formula also works backwards. You can divide 72 by 9—because you want your money to double every 9 years—to get the interest rate you need to reach $1 million by retirement. Give it a try…

Sarah thinking

Sure. 72 divided by 9 equals 8—which means I need an 8% rate of return on my money. Huh. I wonder what rate I’ve been getting…

Formula showing 72 divided by 9 equals 8

That would be worth finding out, Sarah. Time to call your financial professional. It’s amazing how the Rule of 72 creates urgency so we can become more savvy and strategic about our personal finances.

The Hazard of Not Knowing the Rule of 72

The national average interest rate for savings accounts is .10%.1

.10%

Apply The Rule Of 7272 ÷ .10% = 720

Your Money Would Double In720 years!

Compare that to

The national average interest rate for credit cards, which is over 16%.2

16%

Apply The Rule Of 7272 ÷ 16% = 4.5

The Money You Owe Would Double In4.5 years!

Zoey realizing how money works

So their money doubles every time there's a new Summer Olympics and ours doubles every time there's ...

Mei helping Zoey understand how money works

... a new civilization. That's why everyone on Earth needs to know the Rule of 72.

There’s almost $10 trillion of consumers’ money stagnating in savings accounts averaging only .10% annual interest.3

Rule Of 72 Shield

The Rule of 72 can help protect you from gimmicky promotions from banks, settling for opportunities that don’t give you the advantage, and taking on debt that might take forever to pay off.

Contact me to learn more about how the Rule of 72 impacts your life.

Free Chapter

Download the entire Rule of 72 chapter from "HowMoneyWorks, Stop Being a Sucker"

Click the confirmation link in the email you receive.