The Rule of 72: Years to Double Your Money

One way of determining if a certain investment is a scam or not, if it will give you high returns but with low risk or no risk at all. Therefore, it is a scam. There is no such thing as guaranteed returns of 5-10% monthly or even worse double your money in one to two months! 

But how long will it take to double your money? Answer: by using the rule of 72. Take the number 72 and divide it by the annual rate of interest that your money is earning to know the number of years it will take your money to double. 

To give you an illustration, assuming you have a savings account with BPI worth Php50,000 at 1% interest rate per year, it will take 72 years for your money to become Php100,000. What if you are already 30 years old? You will be 102 years old then for your money to grow double. Do you think you can still wait for that long and can enjoy your hard-earned money?

source: yahoo! images

Conclusion

Find higher interest rates (better-than-inflation) investment vehicles like Mutual Funds and Stocks. Because if you choose to put your money in Mutual Funds or Stocks that will give you an average compounding interest rate of 12% per year, it will only take 6 years to double your money. These investment vehicles can give you higher interest rates but not guaranteed and definitely not a scam.

More on how to avoid scam, watch this Pesos and Sense’s video.