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What is rule of 72?
The 'Rule of 72' is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to be double.
For example, the rule of 72 states that Rs 10000 invested at 10% would take 7.2 years ((72/10) = 7.2) to turn into Rs.20000
When dealing with low rates of return (less than 20%), the Rule of 72 is fairly accurate.
