The Rule of 72

The Rule of 72 isn’t exactly a secret formula. It’s more like a general rule. Usually, people use this rule to figure out how long it will take for some investment or savings account to double in value. The Rule of 72 is a cool little trick, however, and it has several useful applications for business people.

What the rule says is that if you divide the value 72 by an interest rate percentage, your result is approximately the number of years it will take to double your money. For example, if you can stick money into some investment that pays 12 percent interest, it will take roughly six years to double your money because 72 / 12 = 6.

The Rule of 72 isn’t exact, but it’s usually close enough. For example, if you invest £1,000 for six years at 12 percent interest, what you really get after six years isn’t £2,000 but £1,973.92.