The Rule of Seventy-Two

Divide 72 by thy annual rate of return, and thou shalt know the years required to double thy gold. At 8%, money doubles in 9 years. At 12%, in 6. At 24%, in 3. This is the closest thing the universe offers to a magick spell.

The Rule of 72 is the secret weapon of the wealthy and the silent poison of the indebted. The credit card at 24% doubles thy debt in 3 years if thou pay nothing. The index fund at 10% doubles thy stake in 7 years if thou touch nothing. Same rule, opposite directions.

Run the numbers on thy own life. If thou hast $10,000 today and findest a vehicle yielding 9%, then in 8 years thou hast $20,000, in 16 years $40,000, in 24 years $80,000, in 32 years $160,000, in 40 years $320,000. Five doublings from a single $10,000 deposit and the discipline to leave it alone.

Now reverse it: what if thou addest only $200 a month for those 40 years? The answer is roughly $930,000. The contributions sum to $96,000. The other $834,000 is interest upon interest upon interest — the Working of the Rule, made visible.