# Rule of 72

There is a shortcut finance folks use to quickly estimate in their head when an investment should double in value. You take 72, and divide that by the rate of return. For example, if you invest \$100 and earn a steady 9%, you should expect to have \$200 in 8 years. The same rule is used in reverse, to calculate how many years your \$100 would be reduced by half (your “decay” rate). Lose 9% a year and you will have \$50 in 8 years. The rule gives you an approximate, the more precise number to use is 69.3, but nobody can quickly calculate in their head with that awkwardness in the numerator. If they can, they can probably do all sorts of other things of interest to the neurochemical community. Or, they might be one of those saavants who can’t look anyone in the eye or use personal pronouns.

Which begs the question: what’s the point? No point, but 72 is an interesting number divisible by 36, 2, 24, 3, 18, 4, 12, 6, 9, and 8. I hope your decay rate is 36 and not 3. Now quit procrastinating and finish your taxes with this in mind: you really should open a Roth IRA, the deduction you are getting now is not worth nearly as much as your tax free earnings in the future. No guarantees, but your future self will look back on your current self with a sigh of relief.

PS, If you didn’t make much money this year, check out the saver’s credit.