Hi everybody,This is me again, well I guess that it’s quite difficult to calculate a logarythm in your head. Quite impossible in fact to be sincere. Well, without a calculator I mean. And specific and custom log function are not easy to find on an average – even graphic and scientific – calculator.
Here is a way to evaluate approximately how long does it take to double your money given any specified interest rates. This is the second course of finance on Interest I got from Kacademy.
The rule of 72. 72 is the key number. You just have to divide 72 by your interest rate and you get the answer expressed in years.
So 72/10 is 7,2 years. 10% risk free interest is high by historical standards. For the actual regulated risk free saving in France, you will get currently 1,25%. So with 1000 euros you will need to wait around 70 years to double your money assuming that interest rates won’t change which is by the way impossible. It is easier than to use a log based function isn’t it ?
But this is not the incentive to lower interest rates in the ECB (the rate at which banks can borrow money from the ECB) from 0,5% to 0,25% which will help actual interest rates to go up. The current threat is not anymore inflation in the Euro Zone but Deflation.