what the rule of 70 can tell you
the rule of 70 helps investors determine the future value of an investment although considered a rough estimate the rule provides the years it takes for an investment to double the rule of 70 is an accepted way to manage exponential growth concepts without complex mathematical procedures investors can use this metric to compare investments with different growth rates or annual returns if the calculation yields a result of 15 years an investor looking to double their money in 10 years could make allocation changes to their portfolio to attempt to increase the rate of return examples of how to use the rule of 70rule of 70 vs real growththe rule evaluates investments but can also estimate other economic factors such as population growth or gross domestic product gdp the rule of 70 is an estimate based on a forecasted growth rate if future rates fluctuate the original calculation will be inaccurate as of may 2024 the population of the united states was approximately 342 million a 2020 prediction estimates that the u s population will grow at a rate of 62 annually using the estimation of the rule of 70 the population of the u s will double in 113 years 1real growth figures dispute the use of the rule of 70 in estimating population growth in 1955 the population of the united states was approximately 172 million and was estimated to double by 2025 based on actual population counts and rates of growth if the rule of 70 was used in 1955 to predict the doubling of the population when the growth rate was 1 57 the population would have doubled by 1999 1compound interest and the rule of 70compound interest is calculated on the initial principal and the accumulated interest of previous periods the rate at which compound interest accrues depends on the frequency of compounding the higher the number of compounding periods the greater the compound interest compound interest is a feature in calculating the long term growth rates of investments and the various rules of doubling if the interest earned is not reinvested the number of years it ll take for the investment to double will be higher than a portfolio that reinvests the interest earned the rule of 70 and any other doubling rules include estimates of growth rates or investment rates of return as a result the rule can generate inaccurate results with its limited ability to forecast future growth 