Years Required for Principal to Double
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.
Required Interest Rate
(We're assuming the interest is annually compounded, by the way.)
As you can see, the "rule" is remarkably accurate, as long as the interest rate
is less than about twenty percent; at higher rates the error starts to become
You can also run it backwards: if you want to double your money in six years,
just divide 6 into 72 to find that it will require an interest rate of about 12