It's a small-number approximation based on ln(1+x) ≈ x. It will be reasonably accurate for percentages like 0-10%, but at 100%, the time to double is exactly 1 year, not 72/100 of a year.
Have you heard of Rule of 72?The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years.is this true? http://en.wikipedia.org/wiki/Rule_of_72so a $50,000 will double in 9 years at 8% interest if you just leave it there and not add anymore to it.
Quote from: 2wakefulFlea on April 23, 2014, 01:13:13 PMHave you heard of Rule of 72?The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years.is this true? http://en.wikipedia.org/wiki/Rule_of_72so a $50,000 will double in 9 years at 8% interest if you just leave it there and not add anymore to it.Somebody was watching The Suze Orman show recently!
oh is this her idea? i dont watch her shows, she kinda annoys me how she scolds her callers lol i saw this in one of the PF blogs i am reading... this is good information though
Quote from: 2wakefulFlea on April 23, 2014, 06:05:35 PMoh is this her idea? i dont watch her shows, she kinda annoys me how she scolds her callers lol i saw this in one of the PF blogs i am reading... this is good information thoughNot unless she was an Italian mathematician in the 15th century. Generally, any maths appropriate for high school was discovered by someone who died before there were calculators.
Quote from: warfreak2 on April 23, 2014, 06:23:41 PMQuote from: 2wakefulFlea on April 23, 2014, 06:05:35 PMoh is this her idea? i dont watch her shows, she kinda annoys me how she scolds her callers lol i saw this in one of the PF blogs i am reading... this is good information thoughNot unless she was an Italian mathematician in the 15th century. Generally, any maths appropriate for high school was discovered by someone who died before there were calculators.I wouldn't rule it out, based on her age.
If there was a Suze Orman Rule of 72, it would be "Don't even THINK about retiring until you're at least 72, or have $72 million in cash!"