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In finance, the rule of 72, the rule of 70 [1] and the rule of 69.3 are methods for estimating an investment's doubling time. The rule number (e.g., 72) is divided by the interest percentage per period (usually years) to obtain the approximate number of periods required for doubling.
The Rule of 72 works best in the range of 5 to 10 percent, but it’s still an approximation. ... While inflation may not always stay high, history shows periods where it persisted for years ...
Here’s how the Rule of 72 might work in the context of your retirement planning. Let’s say you’re 35 years old with $100,000 saved for retirement to date.
He introduced the Rule of 72, using an approximation of 100*ln 2 more than 100 years before Napier and Briggs. [8] Its exercises were largely copied without credit from Piero della Francesca's earlier book, Trattato d'abaco. [9] De viribus quantitatis (Ms. Università degli Studi di Bologna, 1496–1508), a treatise on mathematics and magic ...
This "Rule of 70" gives accurate doubling times to within 10% for growth rates less than 25% and within 20% for rates less than 60%. Larger growth rates result in the rule underestimating the doubling time by a larger margin. Some doubling times calculated with this formula are shown in this table. Simple doubling time formula:
The world of investing can be confusing even for seasoned players, but one simple number can make it easy to predict how your money might grow over time. It's known as the rule of 72, a formula ...
For example, compounding at an annual interest rate of 6 percent, it will take 72/6 = 12 years for the money to double. The rule provides a good indication for interest rates up to 10%. In the case of an interest rate of 18 percent, the rule of 72 predicts that money will double after 72/18 = 4 years.
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