How to Use the Rule of 72

The Rule of 72 is a great way to find out exactly how long it will take to double your money.

Applying the Rule of 72 is very simple. What you do is simply divide 72 by your expected average annual interest rate. This will give you an accurate idea of how long it will take to double your money (including the effect of compound interest).

Here is an example of how to apply it: Let's say you are earning a 10% yearly return. Now take the number 72, and divide it by ten. Doing this we find that with a 10% yearly return, it would take a little over seven years to double your money.

Now if you could somehow manage a 24% yearly return, you would double your money in only three years! To the left is a picture showing various rates of return and how long it would take to double your money using the Rule of 72, and how close that estimate is to the actual number of years it would take for your money to double

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