# The Rule of 72 estimates how long it takes for a given amount of money to double in value at a fixed compound interest rate.

The Rule of 72 estimates how long it takes for a given amount of money to double in value at a fixed compound interest rate. For example, investing \$1,000 in a high-yield savings account will earn about 1% interest per year. So, in a few decades (7.2) your money will double. Of course, at 1% per month, the doubling would be in 72 months. (Notice the doubling period is always in the same units of time as the interest rate. Usually, interest is described in annual rates; therefore, the doubling time is in years.) Assume you want to retire at age 60. How much money do you think you will need? What interest rate do you think is a reasonable expectation? By what age will you need to have saved 50% of the final amount? How can you change the time? Explain.

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