Generic selectors
Exact matches only
Search in title
Search in content
Search Posts
Search in pages
Search Products
Filter by Categories
B-BBEE
Blog
Company Secretarial
Featured
General Business
General Interest
Investing in Property
Marketing
Personal Growth
Personal Wealth
Tax
Trusts and Estate Planning

How do you figure out how long it will take for the Rand to halve in value at a particular inflation rate? Use the Rule of 72!

This remarkable “Rule” is very accurate, but is not mathematically exact.

Let’s say that you expect inflation to average 7%. You have R1m under the mattress. How long before it is only worth R500K in buying power?

You divide the number 72 by the inflation rate 72/7 = 10 years. Isn’t that clever?

Say you expect inflation to average 9%, then your R1m will be worth only R500K in 72/9 = 8 years and after another 8 years it will only be worth R250K.

You have a property that is worth R2m now. When will it be “worth” R4m at 8% inflation? 72/8 = 9 years. Then you sell it and have to pay CGT on your “capital gain” of R2m or hang onto it for another 9 years and pay CGT on R6m!

The rule was discovered by none other than Albert Einstein.

Here’s how close it is to the exact mathematical result –

72Proof

Need help with your Trust or Buisness?

Contact us today or set up a free meeting with our CEO, Derek Springett. We have been offering expert advice and business services since 1971. You can also visit our online store to see our full list of services.