The Rule of 72 tells you how many years it will take for your money to double at your current rate of return.
The number in the title is divided by the interest percentage per period to obtain the approximate number of periods (usually years) required for doubling. Seventy two works well in common interest situations and is easily divisible. This rule is easiest for mental calculations or when a basic calculator is available. It is not intended to be a guarantee by any means!
How you do it:
Take your current rate of return (or estimated rate of return) and divide into the number 72 and there’s your answer.
The value 72 is a convenient choice of numerator, since it has many small divisors: 1, 2, 3, 4, 6, 8, 9, and 12. It provides a good approximation for annual compounding, and for compounding at typical rates (from 6% to 10%). The approximations are less accurate at higher interest rates.
For an example, see this table:
