Summary
The Rule of 72 is a back-of-the-envelope metric for calculating how quickly an investment will double in value. It's a solid tool for estimating the effects of compound interest and can be used to gauge the potential growth of your investments. The formula is ridiculously simple. You divide 72 by the annual rate of return you expect to earn on that investment.
The Rule of 72 is a simple formula that anyone with elementary school math skills can calculate. It doesn't require a Wharton MBA or CFA Charter. It also allows you to set realistic expectations for your investments. It can help you determine whether your financial goals are achievable within your investment time frame.
