The Rule of 72 is a specific rule that investors use to calculate the amount of time it could take for an investment decision to double. It assumes that there are no additional contributions and an accurate annual rate of return is established. Profits will continue to increase because every year you make money with the profits of the previous year. With that average annual return of 10 percent, you can double your money in about seven years, Cramer said.
The creation of wealth through investment comes from the power to capitalize on capital over time. Many people aren't thrilled with an annualized return of 10%, but that 10% doubles every seven years. This means that an investment portfolio that generates an annualized return of 10% will be worth eight times more in 21 years. Do you know the rule of 72? It's an easy way to calculate how long it will take for your money to double.
