What rate doubles your money in 6 years?

Question

You want your money to double in 6 years. Solve in your head. Roughly what annual compounding rate do you need? Aim: under 5 seconds.

Accepted Answer

Rule of 72, solved for the rate instead of the time: rate \approx 72 / (	ext{doubling years}). \frac{72}{6} = 12\%. Sanity check: the exact rate is 2^{1/6} - 1 = 1.1225 - 1 \approx 12.25\%, so the estimate is within a quarter of a percent. The rule is symmetric: 72 \approx 	ext{rate} 	imes 	ext{years}, so knowing either factor gives the other. Doubling in 6 years and earning 12\% are the same statement. Takeaway. The rule of 72 works in both directions. Given a target doubling time, divide 72 by it to get the required rate; the product of rate and years is always about 72.

What rate doubles your money in 6 years?

Your answer

More Mental Math questions