Rule of 72

A quick way to determine how long it will take you to double your money at a given interest rate.

How to Calculate

Divide the number 72 by the annual interest rate you expect to get on an investment. The answer represents the number of years it will take to double your money at that interest rate.

72 / interest rate = years to double

For example, if you investment yields 10% interest rate annually, the formula is as follow

72 / 10% interest rate = 7.2 years to double.

In other words, it will take 7.2 years for you to double your money at 10% interest rate annually.

Figuring Out What You Need to Double Your Money

Now let’s suppose you want to double your money in 4 years, but you do not know what interest rate you need in order to do so. You can use the same equation, this time divide 72 by the number of years you have to invest.

72/ years to invest = interest rate needed

From the example above,

72 / 4 years to invest = 18%

In this case, you will need to earn an interest rate of 18% annually to double your money in 4 years.

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