Investing 101: A Little Brush-Up on the Rule of 72
The rule of 72 is a simple and helpful math trick to help you calculate the number of years it will take to double your invested money. All it requires is a basic division problem that you can probably do in your head.
The equation is:
Number of years = 72 / compound annual interest rate
Time out—what's the compound annual interest rate? It's the annual rate of return on your investment, applied to the original principal and to the accumulated interest from previous periods. Compound interest is the engine that will boost your investment to its goal.
Here's an example:
You want to double your investment in a mutual fund that you estimate will return 8% annually. Plug the interest rate (as "8") into the equation:
# of years = 72 / 8
The answer is 9. This means that your money will double in 9 years with an average return of 8%.
The equation works in the other direction, too. If you want to calculate the interest rate needed to double your money in 12 years, you plug 12 into the left side of the equation:
12 = 72 / x
Divide 72 by 12 and the answer is 6. You'll need an annual return of 6% to double your money in 12 years.
The rule of 72 provides an estimate that is extremely close to the exact answer for rates under about 11%. A few percentage points above that, it's better to use 73; a few above that, 74; and so on.
The key to the equation and your returns is annually compounding interest. It works because the interest gained in the previous year grows your investment, boosting the return for the following year. The cycle continues to grow your investment, increasing returns proportionally.
In the first example above, it takes you 9 years to double your investment at an 8% average annual return rate. If your investment is $1,000, you will have $2,000 after 9 years with compounding interest.
Let's say that your investment really did earn 8% every year (an average return rate doesn't necessarily mean that this will happen, but that the end result will be the same as if it did). After 1 year, your investment has earned 8%, or $80.
Now, your investment is $1,080. You earn 8% the next year, too, but this time you're earning 8% on $1,080, not $1,000. So your 8% return for the second year equals $86.40. Your investment has grown to $1,166.40 in two years. This is compound interest in action.
Its effect is drastic. If you'd decided to withdraw the return each year and spend it, instead of letting it compound, your returns would be much different. You still earn $80 after one year, but you take it home and spend it. Your investment stays at $1,000 for the second year, so you earn another $80 that you take home and spend.
You earn the same $80 every year for the nine years it should have taken you to double your money and what is your total return? $80 * 9 = $720. That's $280 dollars less than you would've made with compounding interest. If your investment was $10,000, you would have lost $2,800.
That's a significant difference. The rule of 72 uses the compound annual return rate to help you estimate length of time and rates of return for you to double your money. It's a valuable tool to help you set investing goals that you can achieve.
Every time payday rolls around, I’m on top of the world. Jeff Bezos-level rich - even though I’m anything but. And then somehow the very next day, rent is due.
The cycle continues. The next payday, bills for my apartment. I find myself without a surplus of savings since I just moved and newly-furnished my apartment completely.
Even more terrifying is the looming presence of the holiday season. Halloween’s officially over and before we know it, hello Thanksgiving…and then there’s Hanukkah, Christmas, New Year’s. It’s insane.
I’ve been feeling very British lately. Not in a Union-Jack-obsessed, “Keep Calm and Carry-On” way. I went through that phase in 2012 with everyone else… no thank you. And it’s not even a surge of patriotism catalyzed by the Queen dying — I’m firmly team Diana and team Meghan.
Now that fall is officially here, the holidays will sweep in and I’ll have to contend with the fact that I won’t be spending them with my family in the UK. I went home to London earlier this year, so there’s not much left in my travel budget for another trip across the pond. A few domestic jaunts might be in my future, but the closest I’ll get to England this winter is watching Love Island and Love, Actually.
So in that spirit, I’ve been filling my days with content from my favorite Brits. I’m listening to all the old British rock bands I grew up listening to, patiently awaiting the new Arctic Monkeys album, and rewatching anything with Michaela Coel in it. I even shipped myself an order of British Baked Beans, so you know it’s dire.
I’ve also been watching British YouTubers like Grace Beverley — my favorite. Generally, I only go on YouTube to watch Vogue Beauty Secrets and AD Open Door videos. But I’m so glad I stumbled on Grace. Her content is a mix of London lifestyle (what lured me in), relatable entrepreneurship, and mindful productivity. I’m not a hustle-and-grind-girlboss, but as a creative person in a 9-to-5, I need all the help I can get to stay plugged in. So, the video “how to be really really really productive without getting overwhelmed” changed my approach to WFH.
Grace outlines her own productivity method: the to-do table. Instead of making a simple to-do list, she divides her tasks into a table that anyone can follow. As someone who’s survived with to-do lists for years, I recently implemented Grace’s method, and it’s revolutionized my workdays.
how to be really really really productive without getting overwhelmedwww.youtube.com
I follow her routine to a tee. Here’s how it works:
Essentially, she divides her daily responsibilities into four categories: quick ticks, tasks, projects, and non-negotiables.
- Quick Ticks: Actions that take less than 5-minutes
- Tasks: To-do’s that take up to 30-minutes. Probably don’t take too much brain energy.
- Projects: Long-term list items. These help guide your priorities, even if you’re not crossing them off in one day.
- Non-negotiables: Pick 3 things each day that you must get done. This is how you’ll truly measure success.
With everything written down and sorted, next address your schedule. Meetings, deadlines, and time blocks — whatever works best for you. Write it down. Then make a pact with yourself to stick to them.
This way of categorization provides a roadmap for prioritizing your day — making you far more productive. Have you ever spent the entire day on small tasks and then suddenly realized you hadn’t moved the needle on any task? Or do you spend way too much time on tasks that aren’t a priority? No more. With your non-negotiables laid out, you know what to laser-focus on and what to dedicate energy towards.
Also, it pays to know your working style. I’m not a morning person. Yet, I have to be up and at ‘em super early. So, first thing in the morning, I march through my Quick Ticks to warm me up. I set a time limit, so I can knock out some easy wins which is totally inspiring. Then I move on to bigger things without lingering on emails or admin. For others, it might be more helpful to tackle the big things with all that early-in-the-day brain power earlier.
Grace has great tips on avoiding overwhelm and burnout. My favorite is taking more intentional breaks rather than scrolling through social media. I call this scrolling “productive” because I’m “coming up with pitches.” Oh, the lies we tell ourselves. It’s more productive in the long run to giving my brain a break with non-screen related stimuli.
Grace’s solution? Set a timer to read a real, an actual book. I’ve never thought of this. It’s a genius way to check off some books on my TBR and kickstart my creativity. After reading a good book, I’m completely inspired to write. So having books near my desk helps me step away from the computer during my lunch break for an actual reset. (And yes, the current books I’m reading are by British authors: Assembly by Natasha Brown, and Love in Color: Mythical Tales from Around the World, Retold by Bolu Babalolu.)
In my pursuit of switching out my WFH set-up and getting my life together, I’ve engineered my workstation for success. With my new WFH essentials and Grace’s productivity technique, I’m revitalized for work — despite the fall blues and my melancholy about the pending holidays.
Here are the things getting me hyped for work and helping me crush my Grace Beverley-inspired to-do tables — no lists in sight:
Pack your bags — Southwest Airlines is having a major sale! Fares are as low as $59 one-way if you book by October 3rd.
This end-of-summer super sale is a game-changer for your travel plans through the end of the year. Summertime travel gets all the glory. But why not take advantage of your long weekends, holidays, and PTO this fall. You’ll be surprised at how much travel you can fit in. Keep the fall/winter season exciting with domestic trips that give you all the excitement without breaking the bank. All thanks to Southwest.
Here’s the breakdown:
Where can you go?
You’ll find discounted tickets to and from most airports. Sale fares apply to cross country travel, and even Hawaii, Mexico, and the Caribbean! Whether you’re visiting a new city or revisiting your last beach vacation, this sale has fares to make your travel dreams come true.
What do the fares cover?
Southwest Airlines has multiple fare tiers, each with various benefits. Wanna Get Away fares start at $59, while Wanna Get Away Plus fares start at $89. You can also find great deals on Anytime fares, which offer priority boarding and express lanes. Then there’s Business Select tickets for a luxe experience at an affordable price point.
Do you have to be a Southwest Rapid Rewards member?
You may think these sale fares are too good to be true. Is there a catch? Do you have to be a Southwest Rapid Rewards member to access them? You’re in luck — anyone can attain these fares for a limited time.
But, insider tip, you should consider signing up for Southwest Rapid Rewards. With a free sign up, you earn points and miles with each trip you take. And with this sale, each dollar you spend on these discounted tix can stretch super far until you eventually earn free travel. The only thing better than a sale is free stuff.
I’ve been browsing the Southwest Airlines site, checking out flights and dreaming.