what is the rule of 72

The Rule of 72 is a simple formula used to estimate the number of years it will take for an investment to double at a given annual rate of return. According to Brad Barrett, you divide the number 72 by your expected annual rate of return. For example, if you expect an 8% return, then 72 divided by 8 gives you 9. Therefore, it will take approximately 9 years for your investment to double 1 2.

This rule is a helpful tool when planning investments and understanding the compounding of returns over time. It applies to various investment scenarios and can be used as a guideline to measure the effects of compound interest 1.