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Finance Glossary

Just call us Bond. Amortized bond.

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Rule Of 72

Definition:


A nifty little equation that lets you use the number 72 to figure out how long it will take for you to double the value of your investment. Just divide 72 by the annual rate of return on an investment to find out how many years will take for it be worth twice as much.

Example

You buy a bond for $1,000 at an annual rate of 8%. Divide 72 by 8 and you'll find out that it'll take you nine years to double that 1G.

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