Rule of 72

The Rule of 72 is a simple method of calculating the approximate number of periods over which a quantity will double. If you divide 72 by the expected growth rate, expressed as a percentage, the answer is approximately the number of periods to double the original quantity. For instance, if you were to invest $100 at 9% per annum, then your investment would be worth $200 after 8.0432 years, using an exact calculation. The rule of 72 gives 72/9=8 years, which is close to the exact answer.

On the other hand if you were to leave $100 uninvested when inflation was 9% per annum, the purchasing power of your $100 would have halved after 8 (72/9) years.

See also: exponential growth