{"id":12876,"date":"2022-08-06T08:53:05","date_gmt":"2022-08-06T05:53:05","guid":{"rendered":"https:\/\/roboforex.com\/blog\/?p=12876"},"modified":"2023-06-22T17:24:57","modified_gmt":"2023-06-22T14:24:57","slug":"rule-72-what-is-it-for-and-how-to-use-it","status":"publish","type":"post","link":"https:\/\/roboforex.com\/blog\/2022\/08\/06\/rule-72-what-is-it-for-and-how-to-use-it\/","title":{"rendered":"Rule 72: What Is It for and How to Use It?"},"content":{"rendered":"\n

This overview is devoted to such a method of assessing investments as Rule 72. We will see how it works and how it can be used.<\/p>\n\n\n\n

<\/span><\/a>What is Rule 72<\/span><\/h2>\n\n\n\n

Rule 72 is a simplified calculation method that shows how fast your investments will double if the profitability remains stable. Calculation of complicated percentage (profitability of constant reinvestments) is a really difficult mathematical operation that makes most people grab a calculator. Hence, for less accurate calculations, right on your lap, investors use Rule 72.<\/p>\n\n\n\n

By this method, any person can simply count in their mind and fancy the magic of complicated percentage.<\/p>\n\n\n\n

If you want to know how much time you will need to double your assets if the interest rate<\/a> remains set, this Rule is the fastest option. It was for the first time mentioned in the works of an Italian mathematician Fra Luca Bartolomeo de Pacioli.<\/p>\n\n\n\n

<\/span><\/a>Calculation formula for Rule 72<\/span><\/h2>\n\n\n\n

The mathematical formula for Rule 72 looks as follows:<\/p>\n\n\n\n

T = 72 \/ R<\/strong><\/p>\n\n\n\n

Where:<\/p>\n\n\n\n

T is the time during which the capital be doubled;
R is the interest rate.<\/p>\n\n\n\n

When it comes to assessing the errors of such estimations, you get better results when the interest rate is about 8%. Nonetheless, you can feel confident when the interest rate is between 1% and 15%.<\/p>\n\n\n\n

When the profitability is higher than this, the calculation becomes too inaccurate. In the end, nothing can be compared to the real calculations of complicated percentage with special calculators.<\/p>\n\n\n\n

<\/span><\/a>Example of calculations by Rule 72<\/span><\/h2>\n\n\n\n

For example, let us put various interest rates to the formula. The method is applicable to banking accounts, bonds, and more. If the interest rate is:<\/p>\n\n\n\n