The Rule of 72 (with calculator) (2024)

FAQs

What is the Rule of 72 calculator? ›

The Rule of 72 is a way to estimate how long it will take for an investment to double at a given interest rate, assuming a fixed annual rate of interest. You simply take 72 and divide it by the interest rate number. So, if the interest rate is 6%, you would divide 72 by 6 to get 12.

For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years ((72/10) = 7.2) to grow to $2. In reality, a 10% investment will take 7.3 years to double (1.10^7.3 = 2). The Rule of 72 is reasonably accurate for low rates of return.

Rule of 72 Formula

You can calculate the number of years to double your investment at some known interest rate by solving for t: t = 72 ÷ R.

This means that the investment will take about 12 years to double with a 6% fixed annual interest rate. This calculator flips the 72 rule and shows what interest rate you would need to double your investment in a set number of years.

The rule of 70 is used to determine the number of years it takes for a variable to double by dividing the number 70 by the variable's growth rate. The rule of 70 is generally used to determine how long it would take for an investment to double given the annual rate of return.

The value 72 is a convenient choice of numerator, since it has many small divisors: 1, 2, 3, 4, 6, 8, 9, and 12. It provides a good approximation for annual compounding, and for compounding at typical rates (from 6% to 10%); the approximations are less accurate at higher interest rates.

The number of years it takes for a certain amount to double in value is equal to 72 divided by its annual rate of interest.

dividing 72 by the interest rate will show you how long it will take your money to double.

The rule of 72 is only an approximation that is accurate for a range of interest rate (from 6% to 10%). Outside that range the error will vary from 2.4% to 14.0%. It turns out that for every three percentage points away from 8% the value 72 could be adjusted by 1.

How much will $50,000 amount to in 3 years? ›

Hence, the amount will be Rs. 62,964. How much will ₹50,000 amount in 3 years compounded yearly, if the rates for the successive years are 6%, 8% and 10% respectively?

1 At 10%, you could double your initial investment every seven years (72 divided by 10). In a less-risky investment such as bonds, which have averaged a return of about 5% to 6% over the same period, you could expect to double your money in about 12 years (72 divided by 6).

Summary: An investment of $10000 today invested at 6% for five years at simple interest will be $13,000.

t = ln(100,000/5,000)/0.097 ≈ 12.35 years Using the formula for continuous compounding interest, it will take approximately 12.35 years for a $5,000 investment to grow to $100,000 at an interest rate of 9.7% compounded continuously.

For example, if an investment scheme promises an 8% annual compounded rate of return, it will take approximately nine years (72 / 8 = 9) to double the invested money.

It will take approximately 15.27 years to increase the $2,200 investment to $10,000 at an annual interest rate of 6.5%.

The rule of 72 is a simple formula that shows how quickly your money will double at a given return rate. It works by dividing 72 by your annual compound interest rate and seeing how many years it will take for your investment to double.

Final answer:

It would take approximately 11.90 years for the money to grow from $5,000 to $10,000 with a 6% interest rate.

Rules of 72, 69.3, and 69

The Rule of 72 states that by dividing 72 by the annual interest rate, you can estimate the number of years required for an investment to double. The Rule of 69.3 is a more accurate formula for higher interest rates and is calculated by dividing 69.3 by the interest rate.