𝐓𝐡𝐞 𝐑𝐮𝐥𝐞 𝐨𝐟 𝟕𝟐 𝐢𝐬 𝐮𝐬𝐞𝐟𝐮𝐥 𝐟𝐨𝐫 𝐚𝐥𝐥 𝐤𝐢𝐧𝐝𝐬 𝐨𝐟 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐞𝐬𝐭𝐢𝐦𝐚𝐭𝐞𝐬 𝐚𝐧𝐝 𝐮𝐧𝐝𝐞𝐫𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠 𝐭𝐡𝐞 𝐧𝐚𝐭𝐮𝐫𝐞 𝐨𝐟 𝐜𝐨𝐦𝐩𝐨𝐮𝐧𝐝 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭.

Here are a few examples of how the Rule of 72 can be utilized in the real world to get an estimate about how money will compound in various situations

𝗘𝘅𝗮𝗺𝗽𝗹𝗲 𝟭 - 𝗘𝘀𝘁𝗶𝗺𝗮𝘁𝗶𝗻𝗴 𝘁𝗵𝗲 𝗚𝗿𝗼𝘄𝘁𝗵 𝗼𝗳 𝗮𝗻 𝗜𝗻𝗵𝗲𝗿𝗶𝘁𝗮𝗻𝗰𝗲.
You inherit $100,000 at the age of 29. What interest rate must you earn for it to become $1 million by the time you turn 65? You’ve got 36 years for your money to grow to $1 million, so it will take 3.25 doubles to grow $100,000 to $1 million dollars. Dividing 36 years by 3.25 doubles equals 11. Your money must double every 11 years. Knowing that, now you can run the formula to find your interest rate: 72 ÷ 11 = 6.54.
There you go. You need a financial vehicle that can offer no less than a 6.5% rate of return to hit your goal.

𝗘𝘅𝗮𝗺𝗽𝗹𝗲 𝟮 - 𝗘𝘀𝘁𝗶𝗺𝗮𝘁𝗶𝗻𝗴 𝘁𝗵𝗲 𝗚𝗿𝗼𝘄𝘁𝗵 𝗼𝗳 𝗮𝗻 𝗘𝗰𝗼𝗻𝗼𝗺𝘆.
Let’s say you want to approximate the growth rate of your country’s Gross Domestic Product (GDP). If your GDP is growing at 3% a year you can use the Rule of 72 formula: 72 ÷ 3 = 24. Therefore, in approximately 24 years, your nation’s GDP will double. Unless of course it changes. Were it to slip to 2% growth, how many years would the economy take to double? 72 ÷ 2 = 36 years. Should growth increase to 4%, GDP doubles in only 18 years (72 ÷ 4 = 18).

𝗘𝘅𝗮𝗺𝗽𝗹𝗲 𝟯 - 𝗘𝘀𝘁𝗶𝗺𝗮𝘁𝗶𝗻𝗴 𝗜𝗻𝗳𝗹𝗮𝘁𝗶𝗼𝗻, 𝗧𝘂𝗶𝘁𝗶𝗼𝗻, & 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁.
If the inflation rate moves from 2% to 3%, the time it will take for your money to lose half its value decreases from 36 to 24 years. If college tuition increase at 5% per year, costs will double in 14.4 years (72 ÷ 5 = 14.4). If you pay 15% interest on your credit cards, the amount you owe will double in only 4.8 years (72 ÷ 15 = 4.😎!
– 𝙏𝙤𝙢 𝙈𝙖𝙩𝙝𝙚𝙬𝙨 & 𝘼𝙣𝙙𝙮 𝙃𝙤𝙧𝙣𝙚𝙧

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