Nevada County Picayune and Gurdon Times Newspaper Archive

Making Life Better with the Carrie Connection

How long will it take to double your money if you invest it at six percent interest?

No need to be a master mathematician to calculate that answer. Instead use the Rule of 72' to figure the amount.

How does the Rule of 72' work? It's simple. Just divide the number 72 by the interest rate you expect to earn (in this case six) and you'll find that you can double your money in 12 years.

For example if you invest $5,000 at six percent your investment will grow to approximately $10,000 in 12 years. If your investment earns eight percent you can expect your money to double in just 9 years. See how easy and helpful this rule can be?

The Rule of 72' can also be used to determine the rate of interest you need to earn if you want your money to double in a set number of years. Let's say you're saving for a down payment on a home and you have $6,000 which needs to double to $12,000 in five years. Divide 72 by five and you'll see that you need to find an investment that earns 14.4 percent interest to reach your goal.

If you're thinking, "I have no money to invest," then you need to know about the 70-20-10' rule. This rule recommends that you spend only 70 percent of your take-home pay, save 20 percent for emergencies and short term goals and invest 10 percent for long term goals.

Saving and investing takes sacrifice and determination. Use the rules above to set some savings goals.

More information is available through the following publications: Savings Choices for Beginning Savers  FSHEC-50, or Build Your Savings  FSHEC-43, which you can get through the Nevada County Cooperative Extension Service office at 887-2818.