Spitzer, 1999, Financial Counseling and Planning, v. 10 (1)

Spitzer, J.
J. & Singh, S. (1999). The rule of 72. Financial Counseling and
Planning, 10(1), 89-91.

The Rule Of 72

John J. Spitzer⁽¹⁾
and Sandeep Singh⁽²⁾

The Rule of 72, a staple in financial circles
for estimating the amount of time required for an investment to double
in value, is shown to be quite inaccurate at today’s high rates of return.
The derivation of the Rule of 72 provides insight into how the rule
can be improved. A new rule of thumb, which provides a very high level
of accuracy, is obtained by a simple regression.

Keywords: Future value, Rule of 72, Regression, Retirement
wealth, Saving

1. . John J. Spitzer, Professor
of Economics. SUNY – College at Brockport, Department of Business Administration
and Economics, Brockport NY 14420. Phone: (716) 395-5528, Fax: (716) 395-2542.
E-mail: jspitzer@brockport.edu

2. . Sandeep Singh, Associate Professor
of Finance, SUNY – College at Brockport, Department of Business Administration
and Economics, Brockport NY 14420. Phone: (716) 395-5519, Fax: (716) 395-2542.
E-mail: ssingh@brockport.edu