Understanding the Rule of 72: A Key to Investment Growth

The Rule of 72 is a mathematical formula that estimates how long it will take an investment to double in value or to lose half its value. To calculate the Rule of 72, you divide the number 72 by the rate of return of an investment or account. The Rule of 72 can only be used on investments earning compound interest; it’s most effective on interest rates between 6% to 10%.