Did you know there is a simple and quick way to know how inflation and compounded return effect your hard earned money? It's called "rule of 72".

The formula:

72 given interest rate

=

You will get the number of years inflation rate will halve your money or the number of years compounded return rate will double your money

Example 1:
If you have RM50,000 and wants to know how many years it takes for inflation to halve your money if inflation rate is 3.3%.

Solution:

72 3.3

=

22.7 years or 22 years 8 months for real value of RM50,000 to become RM25,000

Example 2:
If you have RM70,000 and want to know how many years would it take to double your money if you invested in an investment that give 8% return per year.

Solution:

72 8

=

9 years for the real value of RM70,000 to be doubled to RM140,000

So now you have the simple tool to calculate how many years your savings in the bank will double.