The Rule of 72 is a formula that calculates how long it’ll take for an investment to double in value, based on its rate of return.
To calculate the Rule of 72, you divide it by the interest earned on your investments each year by 72. This would give you the number of years it will take for your investments to grow 100% or lose half their value.
The Rule of 72 can only be used to calculate compounding growth or decay. In other words, it can only be applied to investments that earn compound interest, not simple interest.
