What is rule of 72? – Let me quickly explain – “If the inflation rate is 8% (do not use the current inflation rate, use the 20 year moving average which is 8%) you divide 72 by 8 = 9 In other words it is going to take approximately 9 years to half your money in terms of real buying power or within 9 years you must double your money to keep up with an inflation of 8% It is therefore imperative for the long-term investor to make sure his portfolio is properly structured to accommodate this phenomenon.
