A frequent question posed by an investor is: “How much time it will take for my investment to double in value”? This question can be answered by a rule known as “Rule of 72”. It is an approximate way of finding out the doubling period. Suppose the rate of interest is 12%. The doubling period is 6 years.
A more accurate answer can be had by a better formula like:
0.35 + 69/interest rate in % terms. Employing the same rate of 12%, we find that the doubling period is 6.10 years instead of 6 years. This is more accurate than the Rule of 72 formula.