Saturday, January 15, 2011

The Guitar Player’s Rule of 72

We discussed the Rule of 72 a few times before, click here if you missed the previous discussions. If you’re a guitar player, the number 72 should ring a bell.  In case it doesn’t, let’s take a look at something that everyone should recognize immediately:

fretboard

You guessed it – an image of a guitar fret board.  72 still doesn’t ring a bell? Well here we go...
There are 6 strings and 12 frets (the traditional range where about 90% of the guitar playing activity takes place).  6 x 12 = 72.

Next time you wonder what was that number again that allows me to quickly calculate the doubling times for investing my money?  Think of the guitar and 6 strings multiplied by 12 frets = 72 notes.

Here’s the Rule of 72 one more time:
Take the number 72 divide it by the interest rate to find out the number of years it takes to double your initial investment at that given rate.   The formula looks like this:

72 ÷ interest rate = # of years (it takes to double your money)
 
For questions, comments and suggestions, please feel free to use the commentary section or email: clemens@moneymusic101.com
 
Please help us spread the word and promote financial literacy!

4 comments:

  1. At 5% premium we'll twofold our cash in 14 years, as opposed to the "normal" 20. Did you normally deduce the Rule of 72 when finding out about loan fees? Most likely not. Understanding compound exponential development with our direct brains is hard

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