Final answer:
At a 4.7 percent interest rate, it takes approximately 15.32 years to double your money according to the Rule of 72, which demonstrates the impact of compound interest on investments.
Step-by-step explanation:
To determine how long it takes to double your money at a 4.7 percent interest rate, you can use the Rule of 72. This rule is a simplified way to estimate the number of years required to double the invested money at a given annual rate of return. By dividing 72 by the interest rate, you can get a rough estimate of the years needed.
For an interest rate of 4.7%, the calculation would be:
This means it would take roughly 15.32 years for your investment to double at a 4.7 percent interest rate.
Examples of Compound Interest
Compound interest plays a significant role in investments. For instance, a $3,000 investment at a 7% annual rate of return would grow to $44,923 after 40 years, thanks to the power of compound interest. This emphasizes the importance of starting saving money early to maximize returns over time.