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There's a fun way to figure out how long it will take to double your money when you save or invest it. It's called "The Rule of 72." This is how it works:
Divide the number 72 by the interest rate you expect to earn. The answer is approximately how long it will take to double your money.
For example: Assume you will earn 5 percent on your money each year.
(72/5 percent interest = 14.4 years.) So, if you invest $500 at 5 percent interest, your $500 will double to $1,000 in about 14 years. (This assumes you don't have to pay any taxes on the money.)
Now you do the math!
1. If you invest $100 and earn 6 percent, when will it double to $200?
Answer: 12 years (72/6 = 12)
2. If you invest $100 and earn 10 percent, when will it double to $200?
Answer: About 7 years (72/10 = 7.2)
Of course, to earn interest, you'll need to put your money into a savings or money market account at a bank. Or, you can invest the money in stocks, bonds, or mutual funds. Check out these Web sites to learn more about saving and investing:
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