The Rule of 72
The Rule of 72 is a formula used by investors to approximate when an investment, with a fixed annual interest rate (APR), will twofold. If you divide 72 by the APR, it’s possible to get an estimate of how many years it will take for your money to double.
|
Annual Percentage Rate
(APR) |
Rule of 72 Estimate
|
|
1
|
72.00
|
|
2
|
36.00
|
|
3
|
24.00
|
|
4
|
18.00
|
|
5
|
14.40
|
|
6
|
12.00
|
|
7
|
10.29
|
|
8
|
9.00
|
|
9
|
8.00
|
|
10
|
7.20
|
|
11
|
6.55
|
|
12
|
6.00
|
|
13
|
5.54
|
|
14
|
5.14
|
|
15
|
4.80
|
|
16
|
4.50
|
|
17
|
4.24
|
|
18
|
4.00
|
|
19
|
3.79
|
|
20
|
3.60
|
|
30
|
2.40
|
|
40
|
1.80
|
|
50
|
1.44
|
Example
You invest $5,000 at an interest rate of 6%.
72 ÷ 6 = 12
It will take 12 years for you to get $10,000 from your initial investment of $5,000 at 6% APR.
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