Rule of 72

The world of finance can sometimes seem complex, with intricate formulas and calculations. However, there’s a simple rule that can provide a quick estimation of how long it takes for an investment to double in value through compound interest. This rule is known as the “Rule of 72,” and it’s a valuable tool for both seasoned investors and those new to the world of finance. The Rule of 72 is a rule of thumb that provides a rough estimate of how many years it will take for an investment to double in value, given a fixed annual rate of return or interest. It’s a handy shortcut that helps you grasp the power of compound interest without diving into complex mathematical calculations. To use the Rule of 72, divide 72 by the annual interest rate or rate of return. The result will give you an approximation of the number of years it takes for an investment to double. For instance, if you have an investment with an annual interest rate of 8%, using the Rule of 72 gives you: 72 / 8 = 9 This means