72 rule

Definition

The estimation of doubling time on an investment, for which the compounded annual rate of return times the number of years must equal roughly 72 for the investment to double in value.

For example, an investment earning roughly 7% per year will double in value in 10 years -- specifically, 72 divided by 7 is approximately 10.

Also called rule of 72.

Use 72 rule in a sentence

The 72 rule was very important to us and I had a lot of faith that we would get things done indue time and be ready to go.

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If you are dealing with variable interest rates and high levels of inflation, don't depend on the 72 rule to determine whether something is a good investment.

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My financial planner is a big fan of the 72 rule and explained to me that it would show me beyond a doubt how weak my plan to invest in government savings bonds was.

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