Who came up with Rule of 72?

Luca Pacioli
The first reference we have of the Rule of 72 comes from Luca Pacioli, a renowned Italian mathematician. He mentions the rule in his 1494 book Summa de arithmetica, geometria, proportioni et proportionalita (“Summary of Arithmetic, Geometry, Proportions, and Proportionality”).

What is the Rule of 72 and how can it help to inform investors?

The Rule of 72 is a simple way to determine how long an investment will take to double given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors obtain a rough estimate of how many years it will take for the initial investment to duplicate itself.

Why is it called the Rule of 72?

The actual number of years comes from a logarithmic calculation, one you can’t really determine without having a calculator with logarithmic capabilities. That’s why the rule of 72 exists; it lets you basically figure out how long it will take to double without requiring an actual physical calculator on your person.

Did Einstein discover the Rule of 72?

The Rule of 72 was discovered by Albert Einstein and he considered it his greatest discovery even over E=MC2 (Squared). He considered it the most powerful force on earth. In its simplest form Einstein explained it this way. When you invest money, you earn interest on your capital.

What did Einstein say about the Rule of 72?

“In wanting to know of any capital, at a given yearly percentage, in how many years it will double adding the interest to the capital, keep as a rule [the number] 72 in mind, which you will always divide by the interest, and what results, in that many years it will be doubled.

Did Albert Einstein invent the Rule of 72?

How do you do the Rule of 72?

The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years.

What is Rule of 72 in investment explain with an example?

The rule of 72 is a method used in finance to quickly estimate the doubling or halving time through compound interest or inflation, respectively. For example, using the rule of 72, an investor who invests $1,000 at an interest rate of 4\% per year, will double their money in approximately 18 years.

Why is compounding called 8th wonder of the world?

Instead, compound interest is the eighth wonder of the world because: “The real route to riches is to set aside a portion of your money and invest it, so that it compounds over many years. That’s how you will become wealthy while you sleep. That’s how you will make money your slave instead of being a slave to money.”

Is it the rule of 70 or 72?

The rule of 72 is a simple method to determine the amount of time investment would take to double, given a fixed annual interest rate. Instead of using the rule of 70, he uses the rule of 72 and determines it would take approximately 7.2 (72/10) years for his investment to double.

Who said compound interest is the 8th wonder of the world?

Einstein
In this speech, he cited Einstein: “Compound interest is the 8th wonder of the world”. “Compound interest is the most powerful force in the universe.”

How do you calculate the 72 year rule of 72?

How the Rule of 72 Works. Take 72 divided by the investment return (or interest rate your money will earn), and the answer tells you the number of years it will take to double your money. For example: If your money is in a savings account earning 3 percent a year, it will take 24 years to double your money (72 / 3 = 24).

Is it possible to Double Your Money in 72 years?

Perhaps not… but it’s a very useful skill to have because it gives you a lightning fast benchmark to determine how good (or not so good) a potential investment is likely to be. The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72.

What is the rule of 72 for dividend investment doubles?

The Rule of 72 Dividend Annual Interest Rate Investment Doubles in… 72 14\% 5.1 years 72 8\% 9 years 72 5.50\% 13.1 years 72 4\% 18 years

How do you calculate how long does it take to double?

Rule of 72. The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years.