The Rule of 72

Posted By Paul

I thought this was a cool rule to share as I know that compound interest can be a pain to calculate.

The Rule of 72 is a quick and dirty way to approximate how long it will take to double your money given a specific interest rate.

The idea is that you take 72 and divide it by your interest rate, and the number you get is the number of years it will take for you to double your money.

So if you have some investment at a 4% interest rate then 72/4 = 18 so it will take approximately 18 years for your money to double.

There is more in depth info on this (along with other similar rules of thumb at):

http://en.wikipedia.org/wiki/Rule_of_72