What is the rule of 72 equation

It's impossible to predict how your investment is going to go, when it will pay off or if it will at all. That's why the "rule of 72" exists.

What is the Rule of 72?

In other words, you are left with: This chart below compares the numbers given by the Rule of 72 and the actual number of years it takes an investment to double. This method works.

what is the rule of 72 equation

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The Rule of 72

Rule of 72. The investment rate multiplied by the number years is always equal to seventy-two.

what is the rule of 72 equation

The offers that appear in this table are from partnerships from which Investopedia receives compensation. After one year we have:.

Rule of 72: What Is the Formula and Why Does it Work?

Search for: Partner Links. Using the rule of 72 to determine when something is halved instead of doubled also comes in handy if you're using it regarding increasing inflation.

what is the rule of 72 equation

You can however use the rule of 72 to calculate the effects of inflation on your money. Bruce Kamich Feb 26, 2019 4: In this case, "ln" means natural log value as it would on a calculator.

For it to become clearer, input ln 2 into a calculator.

what is the rule of 72 equation

Neat insight! On its face, these may seem like fairly negligible differences, but they can make a difference.