The ‘rule of 72’ is a simple and easy way find out how long it will take an investment to double based on a fixed rate of return. When you divide 72 by the rate of return, you get an estimate of how many years it will take for an investment to double.
For example if you have $1000 invested at a 4% interest rate it would take about 18 years (72/4 = 18) to turn your investment into $2000.
The same can be used on debt that you may owe through credit cards, mortgage, etc, assuming you don’t make any payments at all. For example if you have $1000 in credit card debt and a 15% APR on the card your debt will double in about 4.8 years (72/15 = 4.8) if you don’t make any payments at all.
Whether it’s your savings account, CDs, bonds, stock dividends, or any other interest paying investment, the ‘rule of 72’ will give you an idea of how long it will take your money to double.