Rule of 72
In finance, the Rule of 72 refers to the method for estimating an investment's doubling time, or halving time. These
rules are used for compound interest calculations as opposed to simple interest calculations.
How does it work? The Rule of 72 says that to find the number of years required to double your money at a given
interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double
your money at 4.5 percent interest, divide 4.5 into 72 and get 16 years.
You can also run it backwards; if you want to double your money in six years, just divide 6 into 72 to find that it will
require an interest rate of about 12%.
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