The “Rule of 72” is a method to determine how long for an amount you invested will be double, by given a fixed annual rate of interest. This rule will quickly tell you how many years to make your money double by knowing the interest rate, all you need is by using this rule.
This can be easily calculate by using formula below:
Year to double up = 72 / Interest Rate
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For example:
With a constant 6% interest rate per annual, mean your money will need 72/6 = 12, 12 years to become double.
To make your money double in 6 years, mean you need 72/6 = 12, 12% per annual interest rate.
This rule also can be use for expenses such as inflation rate.
For example:
If inflation rates go from 2% to 3%, this means that your money will lose half its value in 36 or 24 years.
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