Rule of 72

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What is the rule of 72?

The Rule of 72 is an easy way to find out how long it will take to double your money. All you need to do is divide 72 by the interest rate that you expect to earn.

R (interest rate) x T (time to double money) = 72 or

rule-of-72


Calculator: How long to double your money?


Let’s say you earn an interest rate of 6%

Then 72/6 = 12

So your money doubles in 12 years

Now, how would you do the opposite? You know that you want your money doubled in eight years, but you don’t know what interest rate you need.

72/8 = 9% interest rate

Higher interest rates double your money in fewer years – let’s take a look at how long it’ll take to double your money with various interest rates.

 


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Years to Double

Albert Einstein is credited in discovering the compound interest Rule of 72. He is quoted as saying that compound interest is “the most powerful force in the universe”.

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