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Investing Rules: The Rule of 69.3


It is common knowledge that if you want to know how many years will it take to double your money, you need to use the Rule of 72. This rule is accurate when it comes to yearly interest rates.


Investing Rules - Rule of 72
"money-profit-finance-business" by nattanan23 is licensed under CC0

However, there is one obscure rule that financial experts use when computing interest rates, especially the continuous compounding. This is the Rule of 69.3.


Why 69.3?


This is based on the result of the logarithmic function of 2. If we Ln(2), the result will be 0.69314, which is then translated to 69.3.


As a rule of thumb, once the interest rate is more than or below 8%. You need to add or subtract 1 from 72 for every 3 points increase or decrease. For example, if the interest rate is 5%, you need to use 71. If the interest rate is 11%, then you need to use 74.


72 is just more popular because it is more divisible and can be done mentally (assuming that you are a math wiz). The computation is basically the same with the Rule of 72, which is Years = 69.3/interest rate. For further reading, go to my article regarding the Rule of 72.


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Time is what give things value. So don't waste it, invest it.



"The two most powerful warriors are patience and time.”
Leo Tolstoy




- Your Life In Perspective by Ælf ræd (Elf Counsel)

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