# Tag: rule of 72

## The Rule of 72 and The Rule of 116

Someone asked why the rule of 72 works and as an approximation, how good is it? Both questions are fairly easy to solve with a spreadsheet.  I doubt they were so easy 40 years ago.  Here’s how you think about it. The question is:… Continue Reading “The Rule of 72 and The Rule of 116”

## Building Wealth On Purpose

Building great wealth is not easy and most people have insufficient motivation and persistence and too few of the skills.   As an alternative though they should learn what they need to become wealthy enough. Wealthy enough is the amount that gives you the comfort,… Continue Reading “Building Wealth On Purpose”

## The Rule of 72

The rule of 72 is an arithmetic trick that helps you understand compound growth.  It will not make you intuitive but it will help you to understand when to look deeper. Here’s how it works.  The time until money doubles under a constant rate… Continue Reading “The Rule of 72”

## Answer To The Howard Hughes Rate of Return Test

People are not intuitive about compound interest problems so  you need to learn a way to approximate rates of return. On Friday I presented this problem. Howard Hughes inherited \$400,000 and died 53 years later worth \$2,000,000,000.  What was his average rate of return?… Continue Reading “Answer To The Howard Hughes Rate of Return Test”