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The Rule of 72 divides 72 by your interest rate to estimate how long an investment takes to double. A 7% return doubles in roughly 10 years, 10% in about 7 years. Understanding doubling time shapes how you plan financially.
The Rule of 72 divides 72 by your interest rate to estimate how long an investment takes to double. A 7% return doubles in roughly 10 years, 10% in about 7 years. Understanding doubling time shapes how you plan financially.
Now there's something known as the Rule of 72, mathematical quirk that happens to work. So for example, if I'm getting a 7% return a year and I want to know how long is it going to take for this money to double, I can take 72 divided by 7. It's approximately 10 years, right? Now if I have a 10% interest rate, if I do 72 divided by 10, it's 7 years. So you can switch between the years or the interest rate and it tells you the other one. The most important thing in life is how long does something take to double because that basically leads to everything else.
