Rule of 72 - Financial definition
Financial acronyms
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Concise definition of the term rule of 72
Rule of thumb indicating that a certain amount of money placed at an interest rate of i will double its value in ( 72 / i ) years.
Comprehensive definition of the term rule of 72
Example:
According to this rule, an amount of 1 000 €, if placed at an interest rate of 4%, should double its value in 72/4 = 18 years.
The result of recalculating the value using the exact formula gives 1 000 € x ( 1 + 0.04 ) ^ 18 = 2 025.82 €, which is pretty close.