Rule of 72

The “Rule of 72” is a simple formula used to estimate the number of years required to double an investment at a fixed annual rate of return. To use the rule, divide 72 by the annual Interest Rate (expressed as a whole number). The result is the approximate number of years needed for the investment to double.

For example:

• If the Interest Rate is 6%, then:
  72 ÷ 6 = 12 years to double the investment.
• If the Interest Rate is 8%, then:
  72 ÷ 8 = 9 years to double the investment.
• If the Interest Rate is 12%, then:
  72 ÷ 12 = 6 years to double the investment.

This rule is particularly useful for investors and financial planners for quick calculations, though it is most accurate for Interest Rates between 6% and 10%.