Rule of 72

The Rule of 72" is used to estimate the number of periods required to double an investment.  For example, if you were to invest $100 with compounding interest earning 9% per year, the rule of 72 gives 72/9 = 8 years required for the investment to double and be worth $200 - the exact calculation is 8.0432 years.

The attached table shows the periods to double your investment using the rule.  So your high yield interest account earning 2% will double your TFSA in 36 years - which you may live to see.  In contrast, a dividend paying fund earning 4% will double in 18 years.  Earn 300 more basis points (3%), in some private REIT yielding 7%, and you double your money in just over 10 years.

Of course this does not consider taxes but you get the point that a few percentage points in earnings make a big difference in how you investment grows.  So pay attention to management expenses of funds the erode your earnings and growth.

You can also use the Rule of 72 to estimate how inflation eats away at your buying power - a 2% inflation rate means your $100 investment has only $50 of buying power in 36 years.