The Rule of 72 tells you how long it takes an investment to double. The number 72 is divided by the interest rate and you get a rough idea of the number of years the doubling will take. If you have $10,000 in investments and they earn 4 per cent, it will take 18 years for the $10,000 to become $20,000 (72 divided by 4 = 18).
If you know how many times the investment has doubled, you can work back to find the rate of return. A $10,000 investment that doubled to $20,000 in 18 years returned an annual rate of return of 4 per cent (72 / 18 = 4).
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