Financial Quotient

What is the 'rule of 72'?

The "rule of 72" is a simple calculation that can be used to quickly determine how long an investment will take to double, assuming a fixed annual rate of interest.

While the rule of 72 cannot provide a precise figure for how long it will take for an investment to increase twofold, it is an easy way to get a close approximation for investors to manage their expectations. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to double.

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A version of this article appeared in the print edition of The Sunday Times on August 25, 2019, with the headline 'What is the 'rule of 72'?'. Print Edition | Subscribe