The Rule of 72 (with calculator) (2024)

FAQs

What is the Rule of 72 calculator? ›

The Rule of 72 is a way to estimate how long it will take for an investment to double at a given interest rate, assuming a fixed annual rate of interest. You simply take 72 and divide it by the interest rate number. So, if the interest rate is 6%, you would divide 72 by 6 to get 12.

The Rule of 72 is a calculation that estimates the number of years it takes to double your money at a specified rate of return. If, for example, your account earns 4 percent, divide 72 by 4 to get the number of years it will take for your money to double. In this case, 18 years.

To calculate the time period an investment will double, divide the integer 72 by the expected rate of return. The formula relies on a single average rate over the life of the investment.

For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years ((72 ÷ 10) = 7.2) to grow to $2. In reality, a 10% investment will take 7.3 years to double (1.10^7.3 = 2). The Rule of 72 is reasonably accurate for low rates of return.

If you need to double your financial investment in 10 years, a savings account with a 5% interest rate, for instance, wouldn't help achieve your goals. You'd need something with a higher rate of return (at least 7.2%) to make that 10-year milestone happen.

The Rule of 72 is a convenient method to estimate the approximate time for invested capital to double in value. By merely taking the number 72 and dividing it by the rate of return (or interest rate) expected to be earned, the output is the approximate number of years for an investment to double.

Yes, the Rule of 72 can apply to debt, and it can be used to calculate an estimate of how long it would take a debt balance to double if it's not paid down or off.

It would take 14.4 years to double your money. Applying the rule of 72, the number of years to double your money is 72 divided by the annual interest rate in percentage. In this question, the annual percentage rate is 5%, thus the number of years to double your money is: 72 / 5 = 14.4.

The rule of 72 is only an approximation that is accurate for a range of interest rate (from 6% to 10%). Outside that range the error will vary from 2.4% to 14.0%. It turns out that for every three percentage points away from 8% the value 72 could be adjusted by 1.

Using the rule to estimate compounding periods

For instance, if you were to invest $100 with compounding interest at a rate of 9% per annum, the rule of 72 gives 72/9 = 8 years required for the investment to be worth $200; an exact calculation gives ln(2)/ln(1+0.09) = 8.0432 years.

What is the golden rule in calculus? ›

By "golden rule" you may be thinking of the Fundamental Theorem of Calculus, which states that the derivative of the integral of a function is just equal to the original function (they cancel out).

It's an easy way to calculate just how long it's going to take for your money to double. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.

The Buffett Rule is the basic principle that no household making over $1 million annually should pay a smaller share of their income in taxes than middle-class families pay.

The rule of 72 can also be used in reverse to find the annual interest rate you need to double your investments in a specified number of years. For example, say you wanted to double your investment in six years, you would divide 72 by six to get 12.

Final answer:

It will take approximately 15.27 years to increase the $2,200 investment to $10,000 at an annual interest rate of 6.5%.

How can I double $5000 dollars? One way to potentially double $5,000 is by investing it in a 401(k) account, especially if your employer matches your contributions. For example, if you invest $5,000 and your employer offers to fully match at 100%, you could start with a total of $10,000 in your account.

The given problem is a compound interest problem. Therefore, it will take about 9 years for the investment to double.