OK, so I have a question. How can I find out how much time it would take to double an investment, or even triple (or quadruple) it. I'm not talking about constant investment, I'm talking about just one investment, given an interest rate (say 10-20%).

Would I use the FV=PV(1+I)^n equation, with
FV/PV = 2 for time to double
FV/PV = 3 for time to triple
FV/PV = 4 for time to quadruple

and then just solve for n?

 

Rule of 72... google it...

"The Rule of 72 states that an investment at a particular interest rate will double in a certain period of years. You can determine how quickly your investments will double simply by dividing 72 by the interest rate that you will receive. For example, an investment made at a 10% interest rate will double every 7.2 years. "

 

Whoa, too complicated. Just use Rule of 72 like Greenie said...

 

What about tripling? Do you know what the basis is behind that rule?

 

Well my guess would be that if 72/x gives you how long it takes to double, then either:
72/x + 36/x or 108/x would be how long to triple.

 

Meh. I'll use my method. The Rule of 72 (or 69.3 depending on who you ask), only works for up to about 20%. After that you start to introduce a lot of error.

Being an engineer, I like to know the math behind how things work and operate. It might work as a VERY quick estimation, but I need more detail and more precision. For example, the Rule of 72 gives a doubling time of 5 years, 1 month, and 21 days. The actual doubling time is 5 years, 3 months and 14 days. Quite a difference if we're talking about months.

I found out that the math behind the Rule of 72 is the same as my first post.

For doubling Ln(2)/Ln(1+I) = doubling time in years assuming annual compounding.
For tripling LN(3)/Ln(1+I) = tripling time in years assuming annual compounding where I is the interest rate (10% = 0.10)

 

where are you expecting to get a 10-20% interest rate!?

 

www.americanfunds.com or www.vanguard.com

Long term, 10% is reasonable average return anything past 15% is wishful thinking

 

Just get a BAII plus.

 

Actually, a better question here is if you are expecting a double or triple value based on the true value of money, accounting for factors such as inflation, rate fluctuations, etc., or if you are simply basing this on the absolute value of that money that you are thowing in.

If you're talking about the absolute value of money, a 10% interest rate, compounded annually would double an investment in about 7 years. Tripling would take about 11 years.

However, since the value of the dollar must be discounted because its value will decrease over time, to truly double your investment in terms of spending power, you're looking at more like 19 years given your 10% interest rate and a 6% discount rate.

 

Yeah I checked both but I thought he was talking about 10-20% INTEREST, not an average return as in a mutual fund or stock.

 

http://allfinancialmatters.com/2007/...le-your-money/