Have you ever wondered how long it would take to double a given amount of money? One way to calculate the time is by the "Rule of 72". The "Rule of 72" is a short cut to calculate how long it takes to double an amount of money at a given rate of interest. The steps below use an example of $100 invested at an interest rate of 6% per year.
Things You Will Need
A calculator and/or a computer are recommended but not necessary.
Divide the number 72 by the interest rate. Example: $100 invested at an interest rate of 6% a year will take 12 years to double to $200. This is calculated by dividing 72 by 6.
How often the interest is paid (compounded) can make a significant difference in how long it takes to double the investment. The more often it compounds, daily, weekly, monthly, or yearly, the shorter the time it takes to double the original investment.
The rule of 69 gives a more accurate number on longer periods of time. The actual number to divide into by the interest rate is 69.3. There are a number of financial calculators or spreadsheet applications that can calculate the time period easily for you.
The "Rule of 72" is a great short cut to calculate how long it takes to double an amount of money at a given rate of interest. Give it a try and you might be surprised by the results.