The Rule of 72 to Measure Interest Rates

The Rule of 72 is a quick way to get an approximate reading of interest rates or total returns.

Example: An investment takes about 12 years to double. How much is the annual return?  Simply divide 72 by 12 and you get 6. It thus takes about 6% return for the investment to double.

What if the investment doubles in six years. Then divide 72 by 6 for an answer of 12. The investment is producing returns at about the rate of 12% a year.

Just divide 72 by the number of years to get an idea of return. Or 72 by returns to get the number of years for the approximate time to double the principal.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)