"Compound Interest and the Rule of 72"

One of the most well known rules of interest rates, or any rate is the “Rule of 72.” The Rule of 72 is that you take the interest rate and divide it into 72 and that’s roughly how many years it will take to double your principal. For example, if you have $10,000 in a savings account at a bank, earning you 3.0%, divide 3.0% into 72. It will take 24 years to double your money.

3% rate - 72/3 = 24 years
6% rate - 72/6 = 12 years
12% rate = 72/12 = 6 years

TASK: What is it about compound interest that inspired Albert Einstein to say "The most powerful force in the universe is compound interest"?

Einstein once said, "If people understood the Rule of 72 they would never put their money in banks!” He was inspired by the thought of doubling the amount of his intial investment over time.

Click the "Compound Interest Calculator" above, and follow the link for directions, and use of the actual calculator.**