Question

If you are retiring in 18 years and you are investing $25,000, what percentage rate of return do you need to double your money by the time you retire?( Remember if you know the years before retirement then divide that into 72)

Answer 1

Answer: 4%

Step-by-step explanation:

The Rule of 72 allows us to calculate the number of years it would take for an investment to double.

It works by dividing 72 by the rate to find the number of years.

Number of years = 72/ rate

As we are looking for the rate, the formula becomes:

Number of years = 72/ rate

Rate * Number of years = 72

Rate = 72 / Number of years.

Rate = 72 / 18

= 4%