Showing posts with label rule72. Show all posts
Showing posts with label rule72. Show all posts

Thursday, April 18, 2013

Rule 72: Rougly estimate when your saving become double.

Let say you have $100k and you are thinking of to save it in your favourite bank. Your favourite bank everage dividen rate is 6% per annum. You want to know when is your saving become double because you  have plan something in future. By using rule 72 you can estimate your saving doubling time. The formula is : 72/rate per annum( or per day or months - result will in days/months)

Initial investment: $100,000
Dividen rate - compounding : 6% per annum
Estimate period: 72/6=12 years

It means, roughly 12 years required for your saving to be worth $200k.

Table below show the actual your saving balance if your bank interest/dividen rate is 6% every year.

Year Date                Balance
0 1-Jan-13                 100,000
1 1-Jan-14                 106,000
2 1-Jan-15                 112,360
3 1-Jan-16                 119,102
4 1-Jan-17                 126,248
5 1-Jan-18                 133,823
6 1-Jan-19                 141,852
7 1-Jan-20                 150,363
8 1-Jan-21                 159,385
9 1-Jan-22                 168,948
10 1-Jan-23                 179,085
11 1-Jan-24                 189,830
12 1-Jan-25                 201,220

For more accurate, you can use future value formula or use your financial calculator.