Rule of 72

Question 1

Where is the rule of 72 most accurate?

Answer 1

The rule of 72 is most accurate for interest rate between 6% to 10%

Question 2

What does rule of 72 tend to do for low interest rates

Answer 2

For low interest rate, it tends to underestimates the doubling time

Question 3

What does rule of 72 tend to do for high interest rates

Answer 3

For high interest rate, it tends to overestimates the doubling time

Question 4

Is there a rule of thumb to enhance the rule of 72?

Answer 4

For interest rate below 6%: use 71 instead of 72
AND
For interest rate above 10%: use 73 instead of 72

Question 5

Rule of 72 formula

Answer 5

Time to double an interest rate = .72 / rate

Question 6

What is the rule of 72?

Answer 6

It is a method for estimating an investment’s doubling time