• 2. 12. 2024 • H. T. •
The Rule of 72
The Rule of 72 is also used to determine how long it takes for currency to halve in value for a given rate of inflation.
The formula: “years = 72/inflation rate”
For Example, if inflation is 2%: 72 / 2 (% inflation) = 36 (years).
If inflation is 4% your currency will loose half of it purchasing power in 18 years, if inflation is 8% your currency will buy you half of what it does today in only 9 years.
Conclusion
If you save your hard earned “money” for retirement, you can expect it will loose (at least) half of its purchasing power when you intend to use it in the future, due to inflation.