Mini Feature RULE OF 72

By: Dr K C Gupta, YBB Personal Finance

CONTRARIAN INDICATORS

AAII Bull-Bear Spread -17.3% (very low)
CNN Fear & Greed Index 34 (fear)
NYSE %Above 50-dMA 56.94% (positive)
SP500 %Above 50-dMA 61.00% (positive)

ICI Fund Allocations (Cumulative), 4/30/26
OEFs & ETFs: Stocks 62.61%, Hybrids 3.96%, Bonds 17.12%, M-Mkt 16.31%

INTEREST RATES

CME FedWatch
Cycle peak 5.25-5.50%
Current 3.50-3.75%
FOMC 6/17/26+ hold (WARSH-Fed)

Treasury

T-Bills 3-mo yield 3.78%, 1-yr 3.86%; T-Notes 2-yr 4.09%, 5-yr 4.21%, 10-yr 4.48%; T-Bonds 30-yr 4.97%;
TIPS/Real yields 5-yr 1.82%, 10-yr 2.17%, 30-yr 2.73%
FRNs Index 3.674%

Bank Rates www.depositaccounts.com/



Stable-Value (SV) Rates, 6/1/26
TIAA Traditional Annuity (Accumulation) Rates
Restricted RC 5.25%, RA 5.00%
Flexible RCP 4.50%, SRA 4.25%, IRA-101110+ 3.65%
TIAA MYGA 4.35% (3-yr), 4.50% (5-yr), 4.60% (7-yr)
TSP G Fund 4.500% (previous 4.500%)

India Fear & Greed MMI 45.14 (fear)
Weekly ETFs: INDA +2.09%, INDY +2.42%, EPI +1.32%, INDH +1.13% | SPY +0.57%

The data above are as of Sunday preceding the publication date.

2nd ANNIVERSARY NOTE

It all started with Publisher’s suggestion 2 years ago to do something on personal finance monthly or biweekly or weekly. After some iterations, there is now a weekly series that mixes market data, global news on India & topical mini features, all within about 750 words. These articles are linked widely in social-media – Bluesky, Facebook, LinkedIn, Threads, X/Twitter & YBB Personal Finance website. This Series is going strong & suggestions or comments are welcome at YogiBearBull@aol.com .

CONSUMERS. UK Haleon (oral care; Sensodyne toothpastes for sensitive teeth) is investing in its largest manufacturing plant in Pithampur/Indore, MP, India. It’s part of rationalizing its global supply-chain. It already has a large distribution network in India. Haleon is 2022 spinoff from UK GSK (old GlaxoSmithKline).

IT/TECH. META will lease AI datacenter that’s to be built by Reliance Industries within 2 years in Jamnagar, Gujarat, India. The datacenter will be powered by renewable energy. The datacenter capacity will be scalable in future from the initial 168 MW. META has also been an investor in Jio Platforms since 2020. Earlier this year, Government announced 20-yr tax exemptions for datacenter investments in India.

RULES-of-THUMB are simple observations that work for specific geographies, situations & sectors. While some such as the Rule-of-72 are universal because they come from the arithmetic of compounding, others such as Bengen’s 4% SWR w/COLA (for withdrawals) work only in N America. There are several financial rules-of-thumbs that originate from tax codes that vary by countries. It’s important to keep this in mind as global searches can easily find rules-of-thumb that can be misinterpreted or misapplied.

SPECIAL TOPIC – RULE OF 72

1. Doubling

A CD/fixed-deposit or investment will double approximately in 72/i, where i is the % interest rate or total-return (TR). It follows from basic compound interest formula. There are refinements of this approximate Rule of Thumb.

If an investment offers potential 8% TR, the portfolio would double approximately in 72/8 = 9 years. Then, 2nd doubling in 9×2 = 18 years (balance is 2^2 = 4x original), 3rd doubling in 9×3 = 27 years (balance is 2^3 = 8x original), 4th doubling in 9×4 = 36 years (balance is 2^4 = 16x original), & so on.

There are also other applications of this Rule of Thumb.

2. Loan/Mortgage – Equal-Point

For uniform payments consisting of principal (most in later years) & interest (most in early years), the equal-point is when the loan principal & interest payments are equal & it happens when the years remaining for loan = 72/i.

Example 1: 30-yr mortgage at 6%, years remaining (formula) = 72/6 = 12, the equal-point is in 30 – 12 = 18th yr.
Example 2: 15-yr mortgage at 6%, years remaining (formula) = 72/6 = 12, equal-point is in 15 – 12 = 3rd yr.
Example 3: For shorter-term car loans (3-6 years), the answer is NEVER because years remaining (formula: 12-24) would be higher than loan maturity & that’s an invalid answer. Because of short maturities, the principal portion of payment is much higher than interest portion from the start, so the equal-point isn’t reached by maturity.

3. Accumulation – Equal-Point

In a uniform systematic investment plan (SIP) with $A/yr contributions, as the balance rises, eventually the interest credit on balance becomes equal to the annual contributions. The equal-point in years = 72/i

Example: 20-yr SIP at 6%, the equal-point is in the 72/6 = 12th year. Beyond this time, the interest credits on balance continue to get larger than the annual contributions.

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