{"id":2473171,"date":"2023-09-15T20:35:31","date_gmt":"2023-09-16T00:35:31","guid":{"rendered":"https:\/\/www.valuewalk.com\/?p=2473171"},"modified":"2023-09-15T20:35:33","modified_gmt":"2023-09-16T00:35:33","slug":"visualized-how-long-does-it-take-to-double-your-money","status":"publish","type":"post","link":"https:\/\/www.valuewalk.com\/visualized-how-long-does-it-take-to-double-your-money\/","title":{"rendered":"Visualized: How Long Does It Take To Double Your Money?"},"content":{"rendered":"\n<p>At first glance, a 7% return on your investment may not seem that impressive. Yet what if you heard that your money could double in roughly 10 years?<\/p>\n\n\n\n<p>The above graphic takes the <strong>rule of 72<\/strong> shortcut and uses the more precise logarithmic formula to show how long it takes to grow your money at different annualized returns.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why it Pays to Know the Math<\/h2>\n\n\n\n<p>Using the classic rule of 72, an investor can estimate how long it takes to double their money. At 7% annual returns, an investor would see $10,000 grow to $20,000 in about a decade by taking 72 and dividing it by 7%, the rate of return.<\/p>\n\n\n\n<div class=\"ca-widget\" data-token=\"k8f5c9ac62a4\"><\/div><script async defer src=\"https:\/\/secure.money.com\/embeds\/embedder.js?v=1\"><\/script>\n\n\n\n<p>While the rule of 72 serves as a guide to estimating when your <a href=\"https:\/\/wealth.visualcapitalist.com\/visualizing-power-compound-interest\/\" rel=\"nofollow\" target=\"_blank\">money will double<\/a>, the more accurate way to arrive at this number is through a logarithmic equation.<\/p>\n\n\n\n<p>In short, it divides the natural log of 2 by the natural log of 1 and adds this to the rate of return. We can see in the table below how leads to different results from the rule of 72:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><td>\n<p><strong>Rate of Return <\/strong><\/p>\n<\/td><td>\n<p><strong>Rule of 72<br \/># of Years to Double Money<\/strong><\/p>\n<\/td><td>\n<p><strong>Logarithmic Formula<br \/># of Years to Double Money<\/strong><\/p>\n<\/td><\/tr><\/thead><tbody><tr><td>\n<p>2%<\/p>\n<\/td><td>\n<p>36.0<\/p>\n<\/td><td>\n<p>35.0<\/p>\n<\/td><\/tr><tr><td>\n<p>3%<\/p>\n<\/td><td>\n<p>24.0<\/p>\n<\/td><td>\n<p>23.5<\/p>\n<\/td><\/tr><tr><td>\n<p>4%<\/p>\n<\/td><td>\n<p>18.0<\/p>\n<\/td><td>\n<p>17.7<\/p>\n<\/td><\/tr><tr><td>\n<p>5%<\/p>\n<\/td><td>\n<p>14.4<\/p>\n<\/td><td>\n<p>14.2<\/p>\n<\/td><\/tr><tr><td>\n<p>6%<\/p>\n<\/td><td>\n<p>12.0<\/p>\n<\/td><td>\n<p>11.9<\/p>\n<\/td><\/tr><tr><td>\n<p>7%<\/p>\n<\/td><td>\n<p>10.3<\/p>\n<\/td><td>\n<p>10.2<\/p>\n<\/td><\/tr><tr><td>\n<p>8%<\/p>\n<\/td><td>\n<p>9.0<\/p>\n<\/td><td>\n<p>9.0<\/p>\n<\/td><\/tr><tr><td>\n<p>9%<\/p>\n<\/td><td>\n<p>8.0<\/p>\n<\/td><td>\n<p>8.0<\/p>\n<\/td><\/tr><tr><td>\n<p>10%<\/p>\n<\/td><td>\n<p>7.2<\/p>\n<\/td><td>\n<p>7.3<\/p>\n<\/td><\/tr><tr><td>\n<p>11%<\/p>\n<\/td><td>\n<p>6.6<\/p>\n<\/td><td>\n<p>6.6<\/p>\n<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Consider if an investor put their money in the <a href=\"https:\/\/www.visualcapitalist.com\/complete-breakdown-of-sp-500-companies\/\" rel=\"nofollow\" target=\"_blank\">S&amp;P 500<\/a>. Historically, it has averaged 11.5% returns between 1928 and 2022. In 6.4 years, their money would double, assuming these average returns.<\/p>\n\n\n\n<p>If they were to put this money in a savings account, where the average savings rate is 0.6%, it would take 120 more years for their money to reach this potential.<\/p>\n\n\n\n<p>In real terms, which takes inflation into account, an investor would see their money lose value if they parked it in a savings account. Historically, inflation has averaged 3.3% over the last century.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Historical Asset Returns<\/h2>\n\n\n\n<p>Here\u2019s how often different assets double, based on historical returns between 1928 and 2022:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><td>\n<p><strong>Asset <\/strong><\/p>\n<\/td><td>\n<p><strong>Average Annual Return<br \/>1928-2022<\/strong><\/p>\n<\/td><td>\n<p><strong># of Years to<br \/>Double Money<\/strong><\/p>\n<\/td><td>\n<p><strong>End Value of $100 Invested<br \/>1928-2022<\/strong><\/p>\n<\/td><\/tr><\/thead><tbody><tr><td>\n<p>3-Month T Bill<\/p>\n<\/td><td>\n<p>+3.32%<\/p>\n<\/td><td>\n<p>21.22<\/p>\n<\/td><td>\n<p>$2,140.51<\/p>\n<\/td><\/tr><tr><td>\n<p>Real Estate<\/p>\n<\/td><td>\n<p>+4.42%<\/p>\n<\/td><td>\n<p>16.03<\/p>\n<\/td><td>\n<p>$5,121.52<\/p>\n<\/td><\/tr><tr><td>\n<p>U.S. T Bond<\/p>\n<\/td><td>\n<p>+4.87%<\/p>\n<\/td><td>\n<p>14.58<\/p>\n<\/td><td>\n<p>$7,006.75<\/p>\n<\/td><\/tr><tr><td>\n<p>Gold<\/p>\n<\/td><td>\n<p>+6.48%<\/p>\n<\/td><td>\n<p>11.04<\/p>\n<\/td><td>\n<p>$8,866.76<\/p>\n<\/td><\/tr><tr><td>\n<p>Corporate Bonds*<\/p>\n<\/td><td>\n<p>+6.96%<\/p>\n<\/td><td>\n<p>10.30<\/p>\n<\/td><td>\n<p>$46,379.53<\/p>\n<\/td><\/tr><tr><td>\n<p>S&amp;P 500**<\/p>\n<\/td><td>\n<p>+11.51%<\/p>\n<\/td><td>\n<p>6.36<\/p>\n<\/td><td>\n<p>$624,534.55<\/p>\n<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Source: NYU Stern. *Represents Baa corporate bonds, which are considered investment grade. **Includes reinvested dividends.<\/p>\n\n\n\n<p>We can see that 3-month T-Bills, often considered among the safest assets, doubled about every 21 years. Often, investors consider this a place to put cash that is low-risk and highly liquid.<\/p>\n\n\n\n<p>Interestingly, real estate assets had returns of 4.4%, doubling roughly every 16 years. Between 1928 and 2022, the value of $100 invested in real estate assets would be worth $5,121.52. By contrast, the value of $100 invested in the S&amp;P 500, including reinvested dividends, would have reached over $624,000.<\/p>\n\n\n\n<p>Data from <a href=\"https:\/\/pages.stern.nyu.edu\/~adamodar\/New_Home_Page\/datafile\/histretSP.html\" rel=\"nofollow\" target=\"_blank\">NYU Stern<\/a> shows that the S&amp;P 500 has doubled about <strong>10 times<\/strong> since 1949\u2014through recessions and bull markets\u2014illustrating the power of investing over the long run.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"1200\" height=\"2017\" src=\"https:\/\/www.valuewalk.com\/wp-content\/uploads\/2023\/09\/Double-Your-Money.jpeg\" alt=\"Double Your Money\" class=\"wp-image-2473172\" srcset=\"https:\/\/www.valuewalk.com\/wp-content\/uploads\/2023\/09\/Double-Your-Money.jpeg 1200w, https:\/\/www.valuewalk.com\/wp-content\/uploads\/2023\/09\/Double-Your-Money-178x300.jpeg 178w, https:\/\/www.valuewalk.com\/wp-content\/uploads\/2023\/09\/Double-Your-Money-768x1291.jpeg 768w, https:\/\/www.valuewalk.com\/wp-content\/uploads\/2023\/09\/Double-Your-Money-914x1536.jpeg 914w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n\n\n\n<p><strong><em>Article by Dorothy Neufeld, <a href=\"https:\/\/advisor.visualcapitalist.com\/how-long-does-it-take-to-double-your-money\/\" rel=\"nofollow\" target=\"_blank\">Visual Capitalist<\/a><\/em><\/strong><\/p>\n ","protected":false},"excerpt":{"rendered":"<p>At first glance, a 7% return on your investment may not seem that impressive. Yet what if you heard that &#8230; <a title=\"Visualized: How Long Does It Take To Double Your Money?\" class=\"read-more\" href=\"https:\/\/www.valuewalk.com\/visualized-how-long-does-it-take-to-double-your-money\/\" aria-label=\"More on Visualized: How Long Does It Take To Double Your Money?\">Read more<\/a><\/p>\n","protected":false},"author":16913,"featured_media":2467982,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2689],"tags":[666907,664179,645498],"states":[],"acf":[],"modified_by":"Umair Tariq","_links":{"self":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts\/2473171"}],"collection":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/users\/16913"}],"replies":[{"embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/comments?post=2473171"}],"version-history":[{"count":1,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts\/2473171\/revisions"}],"predecessor-version":[{"id":2473173,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts\/2473171\/revisions\/2473173"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/media\/2467982"}],"wp:attachment":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/media?parent=2473171"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/categories?post=2473171"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/tags?post=2473171"},{"taxonomy":"states","embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/states?post=2473171"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}