There is an easy way to estimate how long it will take an investment to double. It is called “The Rule of 72”. It is not exact but pretty darn close.
All you have to know is how much interest your investment is earning. Do a little simple math and you will have your answer.
Let me explain. Let’s say you put $1,000 in the bank and it is earning 4% interest. How long do you think it will take to double? If you said 13 years, you are absolutely correct! All you have to do is divide the number “72” by the interest rate and you will have the amount of years it takes to double your money.
You can also use this in reverse. If you wanted to know what interest rate you need to double your money in 12 years all you have to do is divide 72 by 12. You will see that you need to earn 6% in order to double your money in 12 years.
Here is a simple chart you can use if you don’t like doing math:
Percentage RateYears to Double
1%72
2%36
3%24
4%18
5%14.4
6%12
7%10.28
8%9
9%8
10%7.2
11%6.54
12%6
There you have it. A simple way of calculating how fast your money will double
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