It’s a Money Thing – Rule of 72

If you want to be realistic about your investment earnings and help plan for your future, the Rule of 72 is a handy tool to quickly estimate how many years it will take to double your investment at a given rate. The Rule of 72 works with investments that have compounding interest. You simply divide 72 by the rate of annual return (that’s your interest rate). What results is an approximation of how many years it will take for you to double your investment. For example, if you park $1,000 in a CD yielding 2% interest, it will take 36 years to double (72/2=36). The Rule of 72 allows you to do some quick, back-of-the-envelope math when comparing different investment options or when planning out your long-term financial goals.

View our informative video on the Rule of 72