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What is bankers “Rule of 72”?

April 26, 2017banker rule of 72

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What is bankers “Rule of 72”?

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This is a banker’s rule to calculate the number of years it will take for a sum of money to double. You divide the number 72 by the annual percentage rate you are receiving on that sum of money. For example, if you are earning 6% interest on a CD or your house price appreciates 6% per year, 72 / 6 = 12 years, your money or house value will double in 12 years. How long will it take for your money to double if you are earning a 30% return? 72 / 30 = 2.4 years.