The rule of 72 is applied to compounded interest annually. It determines the number of years an investment will take to double itself. At an annual rate of interest (fixed) by dividing 72 by the annual rate of return.
Formula
72 / Interest Rate = Years
Example
If you invested $200 at 6% interest, it will take you about 72/6 = ‘12’ years to double your investment to $400.
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