2016-11-21 00:00:00 Finance and Accounting English Learn how to use the rule of 72, a quick and easy formula to estimate how long an investment will double given a rate of return. The Rule of 72

The Rule of 72

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The rule of 72 is a simple formula that anyone can use to estimate the amount of time an investment takes to double, given a steady annual rate of return. Though it is not a perfect calculation, the approximation is relatively accurate. To find the number of years it will take for an investment to double, simply divide the number 72 by the rate of return. For example, if an investment returns 6% per year, it will take 12 years to double:

72 / 6 = 12

The rule of 72 is most accurate for interest rates between approximately 5% and 10%. As the rate of return gets higher, the accuracy declines.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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