The Rule of 72

A rule of thumb that estimates how long it will take money to double, given a certain rate of interest, compounding annually.

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Key Insights & Principles

Personal Finance

1. To estimate how long it will take an investment (or debt) to double, given a specific compound interest rate, divide the expected rate into 72.
2. Expected returns greatly influence how long it will take for investments to grow over time.
3. Spending today means giving up a significantly larger amount of money in the future.
4. Money invested for a long time will produce huge gains.
5. Financial freedom can be achieved faster if you can figure out how to generate higher returns.

1. Commit to investing over long time.
2. Constantly look for money to invest.
3. Do not touch your investments.
4. Use the power of compounding to increase your wealth.

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