The rule of 72?

What is the rule of 72? The Rule of 72 is one of the methods we can use to estimate an investment doubling time. If we want to find out the number of years that it may take to double your investment at a specific interest rate, we can divide the interest rate into 72.

For example, an investment of $100,000 with an interest rate of 8% will double in 9 years (72/8= 9). If the interest rate is 12% with the same investment amount will double in 6 years (72/12=6). There are other ways to do it but in my job, this is what I typically share with my clients.

I previously read an article saying that The Rule of 72 is accurate if the interest rate is less than 20%. To be safe, I will use the Rule of 72 for interest rates of 19% and under .