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How can you find out how long it will take to double your money when you invest it at a certain interest rate? The answer is surprisingly simple using what investment professionals call the 72 rule which simply states:
To find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For 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.
The “rule” is remarkably accurate, as long as the interest rate is less than about twenty percent; at higher rates the error starts to become significant. You can also run it backwards: if you want to double your money in six years, just divide 6 into 72 to find that it will require an interest rate of about 12 percent.
January 31st, 2008 at 5:53 pm
This is great, I read all sorts of financial planning and investment works, and this is actually the first time I’ve come across this formula.