Rule of 72 (Doubling Time) Calculator
The Rule of 72 is a classic financial rule of thumb that quickly estimates the number of years required for an investment to double in value at a given annual interest rate.
Formula & Methodology
Years to Double = 72 / Rate (%)Rate (%)Expected annualized rate of compound growth.
Practical Worked Example
An equity investor earns an average 12% CAGR and wants to know how quickly Rs 1,00,000 will become Rs 2,00,000.
Interpretation & Industry Benchmarks
The Rule of 72 demonstrates the compounding power of returns across varying interest rates.
Fast compounding cycle.
Doubles roughly once per decade.
Takes nearly two decades to double principal.
Industry Nuance: Rule of 72 is most accurate for rates between 6% and 10%. For higher rates, the Rule of 70 or 73 provides slight refinements.
Analytical Limitations
- Approximation tool for simple estimation; use compound growth calculators for periodic cash additions.
Frequently Asked Questions
Why 72 instead of 70 or 100?
72 is chosen because it has many small divisors (2, 3, 4, 6, 8, 9, 12) making mental math simple, and closely approximates ln(2) for typical investment return rates.