A rule of 72 is a simple formula to determine how long the invested money will take to double.
It follows below mentioned formula.
Years to Double = 72 / Annual Interest Rate (%).
For example:
If you invest Rs 1000 at 8% annual return, the time it takes to double is:
Years to double = 72 / 8 = 9 years. It will take 9 years for Rs1000 to become Rs2000.
Rule of 72 Calculator
Calculate how long it takes for your investment to double using the Rule of 72.
Let's understand Rule of 72 with help of a simple story.
One evening, Aarav sat on the balcony with his Dadu (grandfather), watching the street vendors pack up for the day. The aroma of chai filled the air as Dadu took a sip and looked at Aarav with a smile.
“Aarav beta, do you know a simple trick to determine how fast your money can double?”
Aarav’s ears perked up. “Tell me, Dadu!”
Dadu adjusted his glasses and said, “It’s called the Rule of 72. If you divide 72 by the interest rate, you’ll know how many years it takes for your money to double.”
Aarav tilted his head. “How does that work?”
“Let’s say you put ₹1,000 in a fixed deposit, and the bank gives you 6% interest every year. Now, take 72 ÷ 6, and you get 12. That means your ₹1,000 will become ₹2,000 in 12 years.”
Aarav’s eyes widened. “Wow! So if the interest is 8%, my money will double even faster?”
Dadu nodded. “Yes!
Aarav grinned. “That means the higher the interest, the faster my money grows!”
Dadu chuckled. “Exactly! That’s why people invest instead of keeping money in the bank. But remember, beta, always invest wisely.”
Aarav thought for a while and then said, “Dadu, from now on, I’ll save my pocket money and invest it smartly!”
Dadu patted his back. “That’s my boy! Smart saving today means a wealthy future.”
As they sat there, sipping chai, Aarav knew he had learned something valuable—the magic of the Rule of 72—a simple trick that could help him grow his money over time.