The Rule of 72
The “Rule of 72” will give you the amount of time required to double an investment. This basic formula takes into account compounding interest. It will give an approximate time, and is most accurate for interest rates in the range of 6-10%.
t = time
r = interest rate (or rate of return)
The Rule of 72: t = 72 / r
Example: If you want to invest $1,000 at an interest rate of 6%, it will take about 8 years for it to double to $2,000.
t = 72 / r
t = 72 / 9
t = 8 years
A more accurate formula for higher interest rates to calculate the time required to double an investment is:
t = 72 + (r – 8) / 3
To triple a value over time, use 114 in the numerator instead of 72; to quadruple over time, use 144.
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