Rule of 72 Calculator By Years (2024)

FAQs

What is the Rule of 72 answer? ›

Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.

So, if the interest rate is 6%, you would divide 72 by 6 to get 12. This means that the investment will take about 12 years to double with a 6% fixed annual interest rate. This calculator flips the 72 rule and shows what interest rate you would need to double your investment in a set number of years.

The Rule of 72 is a calculation that estimates the number of years it takes to double your money at a specified rate of return. If, for example, your account earns 4 percent, divide 72 by 4 to get the number of years it will take for your money to double. In this case, 18 years.

Rule of 72

Simply divide the number 72 by the annual rate of return to determine how many years it will take to double. For example, $100 with a fixed rate of return of 8% will take approximately nine (72 / 8) years to grow to $200.

The Rule of 72 is reasonably accurate for low rates of return. The chart below compares the numbers given by the Rule of 72 and the actual number of years it takes an investment to double. Notice that although it gives an estimate, the Rule of 72 is less precise as rates of return increase.

A borrower who pays 12% interest on their credit card (or any other form of loan that is charging compound interest) will double the amount they owe in six years.

Summary: An investment of $10000 today invested at 6% for five years at simple interest will be $13,000.

∴t=10 years.

t = ln(100,000/5,000)/0.097 ≈ 12.35 years Using the formula for continuous compounding interest, it will take approximately 12.35 years for a $5,000 investment to grow to $100,000 at an interest rate of 9.7% compounded continuously.

Final answer:

It will take approximately 15.27 years to increase the $2,200 investment to $10,000 at an annual interest rate of 6.5%.

How many years would it take money to grow from $5000 to $10000 if it could earn 6% interest? ›

Dividing these values gives us: t ≈ 0.6931/0.0583 ≈ 11.9 So, approximately, it would take around 11.9 years for the money to grow from $5,000 to $10,000 with a 6% interest rate.

The rule of 8-4-3 when it comes to compounding indicates a style of investment that accelerates growth with time. Initially, a corpus doubles within 8 years through an average annual return of 12% subsequently another doubling happens for the same period after another 4 years following its initial setting up.

For example, with an initial balance of $1,000 and an 8% interest rate compounded monthly over 20 years without additional deposits, the calculator shows a final balance of $4,926.80. The total compound interest earned is $3,926.80.

The future value of the investment is $12,968.71. It is the accumulated value of investing $5,000 for 10 years at a rate of 10% compound interest.

The number of years it takes for a certain amount to double in value is equal to 72 divided by its annual rate of interest.

You can also apply the Rule of 72 to debt for a sobering look at the impact of carrying a credit card balance. Assume a credit card balance of $10,000 at an interest rate of 17%. If you don't pay down the balance, the debt will double to $20,000 in approximately 4 years and 3 months.

The Rule of 70, while generally more accurate, is less convenient for mental calculations due to the indivisibility of 70 by common numbers such as 3, 4, 6, 8, 9, or 12. Conversely, the Rule of 72, being divisible by those numbers, is often preferred for its ease of use despite being slightly less accurate.

The rule of 70 is used to determine the number of years it takes for a variable to double by dividing the number 70 by the variable's growth rate.