Rule of 72
Have you always wanted to be able to do compound interest problems in your head?
Probably not, unless you're a sociopath, but it's a very useful skill to have because it gives you a lightning fast benchmark to determine how good (or not so good) a potential investment is likely to be.
The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72.
For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years.
Why Stop at a Double?
There's nothing sacred about doubling your money.
You can also get a simple estimate for other growth factors, as this calculator shows:
So Why Does it Work?
If you want to know more, see this explanation of why the rule of 72 works.
(Brace yourself, because it's slightly geeked out.)
