## Does the Rule of 72 really work?

The rule of 72 is quite accurate for low rates of return. The table below compares the numbers given by the rule of 72 and the number of years it takes for an investment to double. Note that while it provides an estimate, the rule of 72 is less accurate as rates of return increase.

How accurate is Rule 72? To take the keys The Rule of 72 is a simplified formula that calculates how long it will take for an investment to double in value, based on its rate of return. To see also : What purchases are a waste of money?. Rule 72 applies to compound interest rates and is fairly accurate for interest rates that fall in the 6% to 10% range.

### How long will it take to double your money at 10% per year?

Defined Rule of 72 Using the Rule, you take the number 72 and divide it by this expected rate. For example, if you have a \$10,000 investment that has made a profit or you expect to earn an average of 10% each year, it would take 72/10 = 7.2 years for your money to double.