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Rule Of 72

Determining an investment's doubling time is not a complex mathematical sequence, however it often involves very precise values that are hard to calculate mentally. Computer programs such as spreadsheets and scientific calculators have functions to calculate the exact answers quickly. However, often an individual in passing may want just a rough estimate of the doubling time. The rule of 72 is used to make these rough estimates for compounded interest investments. It is done simply by dividing 72 by the percentage growth rate. This method does not work for simple interest investments.

Fast Facts

  • The rule of 70 and the rule of 69 are other similar estimation methods
  • Felix's Corollary is another similar method for estimating annuity values in the future.

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