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The Rule of 72

The rule of 72 is a simple mathematical formula that is commonly used to estimate the time it will take for an investment to double in value, given a certain rate of return. The formula is: 72 / interest rate = number of years to double your money.


For example, if you invest money at a rate of return of 9%, then the rule of 72 states that it would take approximately 8 years (72 / 9 = 8) for your investment to double in value.

It's important to note that the rule of 72 is an estimate and not a guarantee. In reality, the actual time it takes for an investment to double can vary based on many factors, including inflation, taxes, and market conditions. The rule of 72 is also not applicable to negative interest rates.



However, the rule of 72 can be a useful tool for individuals to get a rough idea of the power of compound interest and the importance of starting to save and invest as early as possible.

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