## The rule of 72 is used to estimate the no of years required to double your money or deposit at a given annual rate of return. This method is replacement of fancy math which makes calculations complicated in the end.

Let us take an example in the both the methods to have clear insights on, why the rule of 72 is widely used apart of fancy math. so, lets get started!

Let, principal = \$100

rate = 10% and n = number of years

Q) How long does it takes to double the principal at a rate 10% compounding annually?

## 1. Fancy Math Method

Principal(100%+10%)n = 200

100(100% + 10%)n = 200

(1 + 10/100)n = 200/100

(1.1)n = 2         (Now taking logarithms on both the sides)

n = log2/log1.1

= 7.2

#### Check out here to have a clean idea about simple and compound interests

2. Rule of 72

The rule states that to divide the rate with 72. It’s as simple as that! so, lets check this out

## One Reply to “Calculate time taken for doubling your investment/deposits with a simple rule”

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