(We're assuming the interest is annually compounded, by the way.)Īs you can see, the 'rule' is remarkably accurate, as long as the interest rate is less than about twenty percent Īt higher rates the error starts to become significant. The rule 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.įor example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years. but it's a very useful skill to have because it gives you a lightning fast benchmark to determine how good (or not so good) a potential investment is likely to be. Have you always wanted to be able to do compound interest problems in your head?
The Rule of 72 (with calculator) - Estimate Compound Interest
