The rule of 72 is a mathematical shortcut used to estimate the time it takes for an investment to double in value at a given interest rate. It is not clear who exactly invented this rule, as it has been used by people in finance and investment for many years.
However, it is commonly attributed to the mathematician and economist Irving Fisher, who is known for his pioneering work in economics and finance in the early 20th century. Fisher developed a similar formula to the rule of 72, which he called the "Rule of 100." The rule of 100 is used to estimate the time it takes for a given amount of money to double at a given interest rate compounded continuously, and it involves dividing 100 by the interest rate.
Over time, the rule of 72 became more widely known and used, and it is now a popular tool for quick estimates in finance and investment.
The rule of 72 is a shortcut method used to estimate the time it takes for a certain amount of money or investment to double in value based on a given interest rate.
The rule of 72 states that if you divide the number 72 by the annual interest rate (expressed as a percentage), the result will be the approximate number of years it will take for the investment to double in value.
For example, if the annual interest rate on an investment is 6%, using the rule of 72, it would take approximately 12.2 years (72 divided by 6) for the investment to double in value.
While the rule of 72 is a quick and easy way to estimate the time it takes for an investment to double in value, it is only an approximation and assumes that the interest rate remains constant over the entire period of time. In reality, interest rates may fluctuate, and there may be other factors that affect the growth of an investment.
