Difference between revisions of "Rule of 72"
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The '''Rule of 72''' is a rule of thumb used to estimate how long it takes money invested to double at a given interest rate. | The '''Rule of 72''' is a rule of thumb used to estimate how long it takes money invested to double at a given interest rate. | ||
| − | The number 72 is placed into the [[numerator]] and the rate of interest (as a whole number) in the [[denominator]], with the quotient being the approximate number of years (subject to rounding error). | + | The number 72 is placed into the [[numerator]] and the rate of interest (as a whole number) in the [[denominator]], with the quotient being the approximate number of years (subject to rounding error). For example, if an interest rate is 6%, it will take approximately 12 years (72/6) for the investment to double. |
[[Category:Finance]] | [[Category:Finance]] | ||
Latest revision as of 23:49, March 24, 2019
The Rule of 72 is a rule of thumb used to estimate how long it takes money invested to double at a given interest rate.
The number 72 is placed into the numerator and the rate of interest (as a whole number) in the denominator, with the quotient being the approximate number of years (subject to rounding error). For example, if an interest rate is 6%, it will take approximately 12 years (72/6) for the investment to double.