{"id":5568,"date":"2023-02-10T13:16:32","date_gmt":"2023-02-10T13:16:32","guid":{"rendered":"https:\/\/goldenpi.com\/blog\/?p=5568"},"modified":"2024-12-16T09:46:52","modified_gmt":"2024-12-16T09:46:52","slug":"the-calculative-rule-of-72","status":"publish","type":"post","link":"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/","title":{"rendered":"The Calculative \u201cRule of 72\u201d"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">You began an investment, but you are unaware of when your investment will double. The dilemma is understandable; it\u2019s most certainly the thing with all the investors! The Rule of 72 can help in this case.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The scientific logic behind 72 is known, and 72 is how you\u2019ll figure out at what rate or by what time your \u201cInvestments Will Double.\u201d\u00a0 So, what\u2019s in the Rule of 72?<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_79_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#The_discovery_of_The_Rule_of_72\" >The discovery of The Rule of 72<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#What_is_The_Rule_of_72\" >What is The Rule of 72?<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#Whats_fascinating_about_Warren_Buffets_Investment_Strategy\" >What&#8217;s fascinating about Warren Buffet&#8217;s Investment Strategy?<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#How_is_it_estimated\" >How is it estimated?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#Case_1_Figuring_out_the_Time_it_takes_to_double\" >Case 1: Figuring out the Time it takes to double<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#Case_2_Figuring_out_the_Rate_of_Interest_it_takes_to_double\" >Case 2: Figuring out the Rate of Interest it takes to double<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#Where_can_The_Rule_of_72_be_used\" >Where can The Rule of 72 be used?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#1_GDP_Doubling_Estimation\" >1. GDP Doubling Estimation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#2_Population_Growth_Estimation\" >2. Population Growth Estimation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#3_Inflation_Risk_Estimation\" >3. Inflation Risk Estimation<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#The_Essence_of_Volatility\" >The Essence of Volatility<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#The_logic_behind_The_Rule_of_72\" >The logic behind The Rule of 72<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#The_use_of_a_Logarithmic_Formula_for_accuracy\" >The use of a Logarithmic Formula for accuracy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#Takeaway_from_The_Rule_of_72\" >Takeaway from The Rule of 72!<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#Its_time_to_break_the_Bank_FD_Habit\" >It&#8217;s time to break the Bank FD Habit!<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#FAQs_on_the_Rule_of_72\" >FAQs on the Rule of 72<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#1_What_is_The_Rule_of_72\" >1. What is The Rule of 72?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#2_How_is_the_Rule_of_72_calculated\" >2. How is the Rule of 72 calculated?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#3_For_an_accurate_estimate_what_formula_to_use\" >3. For an accurate estimate, what formula to use?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-calculative-rule-of-72\/#4_Where_did_The_Rule_of_72_come_from\" >4. Where did The Rule of 72 come from?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"The_discovery_of_The_Rule_of_72\"><\/span><b>The discovery of The Rule of 72<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Albert Einstein once said, \u201cThere is no force more powerful than the compound interest,\u201d And we all assume that he might also be the one behind inventing, The Rule of 72. But there is no evidence that he discovered it.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Rule of 72 was on the paper even before Einstein, around 400 years ago. The aftermath is found in the book<\/span> <a href=\"http:\/\/coloraccounting.us1.list-manage.com\/track\/click?u=df21b79ecde3b79e2cc1012a3&amp;id=ff382a1fcd&amp;e=3f27450c5f\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">Summa de arithmetica geometria, proporzioni et proporzionalita<\/span><\/a><span style=\"font-weight: 400;\"> written by Luca Pacioli, an Italian Friar in 1494.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Shifting the focus from Albert Einstein to Luca Pacioli, let&#8217;s figure out The Rule of 72!<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_The_Rule_of_72\"><\/span><b>What is The Rule of 72?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">It\u2019s so simple to understand! Any investment that is previously made, should have a fixed rate of compound return to be considered for applying The Rule of 72\u00a0 and with no other considerations.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It gives a fair idea of \u201cThe time or the interest rate it takes to double your investment.\u201d So it is essential to have one of the factors, such as either interest rate or the time (years), to calculate the time or interest rate on the investment.<\/span><\/p>\n<h4 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Whats_fascinating_about_Warren_Buffets_Investment_Strategy\"><\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/whats-fascinating-about-warren-buffets-investment-strategy\/?utm_source=blog&amp;utm_medium=blog&amp;utm_The_Rule\"><strong>What&#8217;s fascinating about Warren Buffet&#8217;s Investment Strategy?<\/strong><\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<h2><span class=\"ez-toc-section\" id=\"How_is_it_estimated\"><\/span><b>How is it estimated?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">To calculate, one must simply divide the number 72 by either the interest rate or the time to find the respective values you are looking for.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Case_1_Figuring_out_the_Time_it_takes_to_double\"><\/span><span style=\"font-weight: 400;\">Case 1: Figuring out the<\/span><b> Time<\/b><span style=\"font-weight: 400;\"> it takes to double<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">To set the grounds, let\u2019s consider an example: you have invested Rs 10,00,000 lakhs and received an interest rate of 6%. And you are wondering, when will my investment double to Rs 20,00,000?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To determine the years it would take to double, divide the 72 by the rate of return. In our context, it is 72\/6, which gives 12. So it takes 12 years to double your investment to Rs 20,00,000.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Case_2_Figuring_out_the_Rate_of_Interest_it_takes_to_double\"><\/span><span style=\"font-weight: 400;\">Case 2: Figuring out the <\/span><b>Rate of Interest<\/b><span style=\"font-weight: 400;\"> it takes to double<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Let\u2019s assume you want your Rs 10,00,000 to double in 6 years. Then what do you think the interest rate should be on your investment?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this case, divide 72 by the years you expect your money to get doubled. That is 72 \/ 6, which results in 12. So you need to get an interest rate of 12% on your investment to fold it in 6 years.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Generally, the higher the interest rate on your investment, the less time it takes to double it.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Where_can_The_Rule_of_72_be_used\"><\/span><b>Where can The Rule of 72 be used?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"1_GDP_Doubling_Estimation\"><\/span><b>1. GDP Doubling Estimation<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">In general, GDP is the value of the goods and services in the market produced by a country within its border in the stipulated time, where the real GDP was 7% in FY 2022 &#8211; 2023 and is anticipated to be 6.5% in FY 2024 as per <\/span><a href=\"https:\/\/www.ndtv.com\/business\/indias-economy-to-grow-6-5-in-2023-24-compared-to-7-in-current-fiscal-according-to-economic-survey-3738814\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">NDTV<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Now, when will the country\u2019s GDP grow by double? Say it\u2019s increased by 2% a year, then it takes 72\/2, i.e., 32 years. Meaning you can see the GDP doubling in 32 years.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Estimating it can give you a clear idea of how a 1% difference in GDP can significantly impact the future.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_Population_Growth_Estimation\"><\/span><b>2. Population Growth Estimation<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">In the same context, what difference does it make if the growth is by 2% or 1%? Then it can impact the future planning of the growth projection in the country.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">First, 1% can take about 72 years, and 2% can take about 36 years. So if the growth rate is 2%, you can cut down 36 years to double the population.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_Inflation_Risk_Estimation\"><\/span><b>3. Inflation Risk Estimation<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Let\u2019s assume the inflation is raised by 4% against 2% this year. Then the 4% will constitute for it to take 18 years to lose your money\u2019s value by half over 36 years in the case of 2%. This means your money will lose value in less time if it\u2019s 4% compared to 2%.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Hence giving you ideas as to where you can invest your money to tackle the <a href=\"https:\/\/goldenpi.com\/blog\/essentials\/did-you-know-about-the-hidden-form-of-inflation\/\" target=\"_blank\" rel=\"noopener noreferrer\">inflation risk<\/a>.<\/span><\/p>\n<h4 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"The_Essence_of_Volatility\"><\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/bond-market\/the-essence-of-volatility\/?utm_source=blog&amp;utm_medium=blog&amp;utm_The_Rule\"><strong>The Essence of Volatility<\/strong><\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<h2><span class=\"ez-toc-section\" id=\"The_logic_behind_The_Rule_of_72\"><\/span><b>The logic behind The Rule of 72<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If the question is why are we multiplying by 72, and what logic does it even have? Then let\u2019s understand it with a penny of Rs 1. Assuming that you are receiving an interest rate of 12%, So after a year, you have;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">1*<\/span><span style=\"font-weight: 400;\">(1+0.12)<\/span><span style=\"font-weight: 400;\"> = 1.12<\/span><\/p>\n<p><span style=\"font-weight: 400;\">By the end of a year, you have Rs 1.12<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Similarly, in two years, it would be;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">1*(1+0.12)^<\/span><span style=\"font-weight: 400;\">2<\/span><span style=\"font-weight: 400;\"> =\u00a0 1.25<\/span><\/p>\n<p><span style=\"font-weight: 400;\">By the end of 2 years, it would be Rs 1.25<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Albert Einstein was right in this case that \u201c<\/span><b><i>Compound Interest is more potent than any other force\u201d.<\/i><\/b><span style=\"font-weight: 400;\"> By keeping the money invested from the earnings, it made more money!<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So, it is reliable to put the calculation done above in general as;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">1*<\/span><span style=\"font-weight: 400;\">(1+R)^<\/span><span style=\"font-weight: 400;\">N<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That\u2019s precisely how your money is growing with an interest of R and time of N years.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Without forgetting our agenda, let\u2019s see how to double the money by Rs 2.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">1*<\/span><span style=\"font-weight: 400;\">(1+R)^<\/span><span style=\"font-weight: 400;\">N<\/span><span style=\"font-weight: 400;\">\u00a0 =\u00a0 2<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On applying natural log on both sides,\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s now;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">N <\/span><span style=\"font-weight: 400;\"> ln (1+R) = 0.693<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While considering the smallest value of R of about 0.25, ln(1+R) is still equal to R.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With that;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">N = 0.693 \/R<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To cut out on the decimals, it becomes;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">N = (0.693 \/ R)<\/span> * <span style=\"font-weight: 400;\">100\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Leaving us with;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">N =\u00a0 69.3 \/ R\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Well, why is it not\u00a0 72 \/ R?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Almost coming there, 69.3 is a fraction and will be hard to divide. In that case, 70 can be used, but that number mainly doesn\u2019t divide every number, and the closest is 72.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That\u2019s how we have:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">N = 72 \/ R<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But the crux is, with a small value of R, it all makes sense, but not when we hit the higher side of the value concerning accuracy.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_use_of_a_Logarithmic_Formula_for_accuracy\"><\/span><b>The use of a Logarithmic Formula for accuracy<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Though the value is rounded off to the whole number 72, it might not be accurate. To be accurate, it\u2019s good to abide by the logarithmic formula that we used above while deriving.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That is,<\/span><\/p>\n<p><span style=\"font-weight: 400;\">N = ln(2) \/ ln (1+R).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Using that, you can expect the most accurate value possible for any interest rate.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A quick fact: 72 is taken, so you can mentally calculate it quickly!<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Takeaway_from_The_Rule_of_72\"><\/span><b>Takeaway from The Rule of 72!<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The Rule of 72 gives an overall picture in forecasting models to predict and do better financial planning. In a gist, to understand how much time or the rate of return it takes to achieve the desired outcome. The outcome in the context is \u201cBy when you can double your money.\u201d For better accuracy using The Rule of 69.3 or 70 can be implemented compared to 72.\u00a0<\/span><\/p>\n<h4 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Its_time_to_break_the_Bank_FD_Habit\"><\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/its-time-to-break-the-bank-fd-habit\/?utm_source=blog&amp;utm_medium=blog&amp;utm_The_Rule\"><strong>It&#8217;s time to break the Bank FD Habit!<\/strong><\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<h2><span class=\"ez-toc-section\" id=\"FAQs_on_the_Rule_of_72\"><\/span><b>FAQs on the Rule of 72<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"1_What_is_The_Rule_of_72\"><\/span><b>1. What is The Rule of 72?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The Rule of 72 is the calculation used to determine <\/span><b><i>the time or the interest rate it takes to double your investment.<\/i><\/b><\/p>\n<h3><span class=\"ez-toc-section\" id=\"2_How_is_the_Rule_of_72_calculated\"><\/span><b>2. How is the Rule of 72 calculated?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">It is calculated by dividing the 72 by the rate of interest or the time, whichever is applicable, and what you are looking for.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"3_For_an_accurate_estimate_what_formula_to_use\"><\/span><b>3. For an accurate estimate, what formula to use?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The Rule of 72 is for a quick calculation in mind. For example, one can use N = ln(2) \/ ln(1+R) for accuracy.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"4_Where_did_The_Rule_of_72_come_from\"><\/span><b>4. Where did The Rule of 72 come from?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">It\u2019s assumed that Albert Einstein came up with this, but it was found 400 years ago by <\/span><span style=\"font-weight: 400;\">Luca Pacioli in 1494.<\/span><\/p>\n<p><script type=\"application\/ld+json\">{\"@context\":\"https:\/\/schema.org\",\"@type\":\"FAQPage\",\"mainEntity\":[{\"@type\":\"Question\",\"name\":\"What is The Rule of 72?\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The Rule of 72 is the calculation used to determine the time or the interest rate it takes to double your investment.\"}},{\"@type\":\"Question\",\"name\":\"How is the Rule of 72 calculated?\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"It is calculated by dividing the 72 by the rate of interest or the time, whichever is applicable, and what you are looking for.\"}},{\"@type\":\"Question\",\"name\":\"For an accurate estimate, what formula to use?\",\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The Rule of 72 is for a quick calculation in mind. For example, one can use N = ln(2) \/ ln(1+R) for accuracy.\"}}]}<\/script><\/p>\n","protected":false},"excerpt":{"rendered":"<p>You began an investment, but you are unaware of when your investment will double. The dilemma is understandable; it\u2019s most certainly the&hellip;<\/p>\n","protected":false},"author":4,"featured_media":5570,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[151],"tags":[130],"class_list":["post-5568","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-matters","tag-rule-of-72"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Calculative \u201cRule of 72\u201d - Rule of 72 Investing | GoldenPi<\/title>\n<meta name=\"description\" content=\"Discover who discovered the rule of 72 for calculating the time it takes for an investment to double. Learn how to use this simple and effective formula for financial planning. 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