After watching this video, you can do some of your own calculations.
If you understand right, this is how the Rule of 72 works:
How much is the earning rate at an investment?
You invest in a company 100.000 euro's.
You have an agreement to get back 200.000 euro's from the company 5 years later.
What interest rate were you earning?
Well, this is the Rule of 72 formula: 72 / 5 = 14,4%¨
Let's take another one.
You're investing in a company 400.000 euro's.
You agree with them to get back 800.000 euro's 10 years later.
What interest rate are you earning?
Formula: 72/10 = 7,2%
How much time does it take my money to double at a certain interest rate?
Well, imagine you're putting 10.000 euro's on your savings account.
Bank A gives you 3% and bank B gives you 4%.
What difference does it make?
Formula: 72/3 = 24
Your 10.000 will double to 20.000 in 24 years.
Formula: 72/4 = 18
Your 10.000 will double to 20.000 in 18 years.