The Rule of 72 is a quick, useful formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return.

**Key Points :**

- The rule of 72 only works with Compounding effect.
- The Rule of 72 is a simplified way to estimate the doubling of an investment's value, based on a logarithmic formula.
- The Rule of 72 can be applied to investments, inflation or anything that grows, such as GDP or population.
- The formula is useful for understanding the effect of compound interest.

**72/Rate of Interest = Years to double the investment.**

Let's understand with an example. Let say I want to invest 1000 rupee with an annual compound interest @8% then my investment will become 2000 rupee in 9 years.

72/8 = 9

or

I want to invest 1000 rupee with an annual compound interest @12% then my investment will become 2000 rupee in 6 years.

72/12 = 6.

This is how you can calculate compound interest calculations easily at least for factor of 72.

3% will take 24 years to double the money.

4% will take 18 years

6% will take 12 years8% will take 9 years

9% will take 8 years

12% will take 6 years and so on...

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