Life hack: how to calculate how long it takes to double the contribution
Tips Forming / / December 29, 2020
On opening contribution in the bank, the key parameter that determines our benefit is the interest rate. The higher it is, the more money we will receive from the invested amount for the reporting period. If your goal is to double your contribution through interest, then you don't need to resort to complicated calculations - there is a fairly simple rule.
If you know what percentage the amount increases over a period of time, then to calculate the time for doubling it, you just need to divide 72 by the percentage of growth.
And the amount itself is not important here. For example, if you invested money at 6% per annum, then you can take twice as much in 12 years (72/6).
This method of calculation is called the Rule 72. It gives an approximate estimate of the period during which the value will double with a constant growth by a certain percentage. The same rule applies when calculating the doubling time of the loan debt. If, for example, it is taken at 3% per day, then in 24 days (72/3) the debt will double.
This rule is also known as the "Rule 70" or "Rule 69". However, the number 72 has a larger number of divisors corresponding to small percentages (1, 2, 3, 4, 6, 8, 9, 12), and therefore 72 is a more convenient option to use as a dividend. There are errors when using such calculations, but they are not so significant if the rate does not exceed 20-25%.
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