The Rule of 72
DEFINITION OF ‘RULE OF 72’
A rule stating that in order to find the number of years required to double your money at a given interest rate, you divide the compound return into 72. The result is the approximate number of years that it will take for your investment to double.
INVESTOPEDIA EXPLAINS ‘RULE OF 72’
For example, if you want to know how long it will take to double your money at 12% interest, divide 12 into 72 and you get six years.
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This table serves as a demonstration of how the Rule of 72 concept works from a mathematical standpoint. It is not intended to represent an investment. The chart uses constant rates of return, unlike actual investments which will fluctuate in value. It does not include fees or taxes, which would lower performance. It is unlikely that an investment would grow 10% or greater on a consistent basis, given current market conditions.
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