Of all the things you can learn about money –the rule of 72 should be at the top of your list.

The Rule of 72 is a shortcut to estimate the number of years required to double your money at a given annual rate of return. **The rule** states that you divide the rate, expressed as a percentage, into **72**: Years required to double investment = **72** ÷ compound annual interest rate. For example, let’s say you can earn a 10% rate of return. How long will it take $1,000 to grow into $2,000?

72 / 10 percent = 7.2 years

In this example, if you invested $1,000 into an account that earned a flat 10% annual rate of return, after 7.2 years, your investment would be worth around $2,000. Conversely if you want your money to double in 6 years, you’d need to be earning 12% interest (net of taxes and fees).

So how does this relate to Real Estate? Well, consider this rule when saving for your down payment. You have X amount now, invested at X interest rate, and therefore you can calculate how long it will take for your investment to double.

CHEAT SHEET – Here’s a list of interest rates, and the corresponding amount of time to double:

1% – 72 years

2% – 36 years

3% – 24 years

4% – 18 years

5% – 14 years

6% – 12 years

7% – 10.3 years

8% – 9.0 years

9% – 8.0 years

10% – 7.2 years

I hope this helps, and please let me know if you have any questions.

Best,

-D