Rule of 72 Calculator
Calculate investment doubling time or required rate of return
Rule of 72 Calculator - Investment Doubling Time
The Rule of 72 Calculator helps you quickly estimate how long it will take for your investment to double in value. Simply enter either the annual rate of return or your target doubling time, and the Rule of 72 Calculator will automatically calculate the other value.
How to Calculate Investment Doubling Time Using Rule of 72
What is the Rule of 72?
The Rule of 72 is a simple mathematical concept that helps investors estimate how long it will take for an investment to double in value at a given annual rate of return. This rule of thumb provides a quick mental calculation for exponential growth scenarios.
Formula and Calculation
The Rule of 72 can be expressed in two ways:
- Years to Double = 72 ÷ Annual Rate of Return (%)
- Required Rate of Return (%) = 72 ÷ Years to Double
The Rule of 72 is most accurate for interest rates between 6% and 10%. Outside this range, the approximation becomes less precise.
Examples
Example 1: Finding Time to Double
With an 8% annual return: 72 ÷ 8 = 9 years to double the investment
Example 2: Finding Required Rate
To double in 6 years: 72 ÷ 6 = 12% annual return required
Limitations and Accuracy
While the Rule of 72 is a convenient approximation, it has some limitations:
- It's an approximation, not an exact calculation
- Most accurate for rates between 6% and 10%
- Assumes continuous compounding
- Doesn't account for taxes, fees, or other external factors