Rule of 72
Rule of 72 is an interactive experiment in Interest & Savings, a free simulation from StudyFi Lab that runs right in your browser.
Money doubles when rⁿ = 2, so the exact doubling time is t = ln 2 / (m · ln r). For everyday rates a quick estimate does the job: t ≈ 72 / p, with p in percent. The chart shows how good the estimate is: it fits best around 8 % and drifts further off for very low or very high rates.
Try this: Find the rate where the two curves cross. Then switch the tax on — how many years later does the money double?
Frequently asked questions
What does the “Rule of 72” experiment show?
Money doubles when rⁿ = 2, so the exact doubling time is t = ln 2 / (m · ln r). For everyday rates a quick estimate does the job: t ≈ 72 / p, with p in percent. The chart shows how good the estimate is: it fits best around 8 % and drifts further off for very low or very high rates.
How do I try “Rule of 72”?
Find the rate where the two curves cross. Then switch the tax on — how many years later does the money double?
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