The Rule of 72

by Greg DePersio

0 min read

The rule of 72 is a simple formula that anyone can use to estimate the amount of time an investment takes to double, given a steady annual rate of return. Though it is not a perfect calculation, the approximation is relatively accurate. To find the number of years it will take for an investment to double, simply divide the number 72 by the rate of return. For example, if an investment returns 6% per year, it will take 12 years to double:

72 / 6 = 12

The rule of 72 is most accurate for interest rates between approximately 5% and 10%. As the rate of return gets higher, the accuracy declines.

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