Rule of 72

This finance video tutorial discusses the rule of 72 and how to use it to determine the time it takes for your investment to double given an annual interest rate.

Assets, Liabilities, & Equity:

The Short Ratio:

Debt to Equity Ratio:

Time Value of Money:

_____________________________
Future Value of Annuity:

More Examples on Annuities:

How To Calculate The Monthly Mortgage Payment:

The Present Value of an Annuity:

Net Present Value & Internal Rate of Return:

____________________________
Annual Percentage Yield:

Amortization Loan Formula:

Amortization Table:

Rule of 72:

Bond Yields:

[joelrichmond]

it's crazy just how many areas this man is able to effortlessly cover

[yamsdoot]

learned this in one of my finance classes earlier in the year and saw how this on my news feed. you don’t know how much it excites me to know you do finance as well! you’ve been my “go-to” for years now!

[successthruknowledge]

My father taught this formula to me many years ago♥

[primsiren]

I clicked on this video just because this is so obscure. Like why the number 72.

[toddschoonover]

Here's the connection to the rule of 72.

The ln2 is about 0.693. If you times that by 100, you get 69.3, which is close to 72. 72 is a nice number because it's divisible by so many numbers (1, 2, 4, 6, 8, 12, etc.) So that's why 72 is used in the rule of 72.

The ln(1+r) is extremely close to r for small values of r. Multiplying r by 100 just expresses it as a percent. So you can substitute r in for ln(1+r) and multiply it by 100, like below.

(.693/r)*(100/100) equals 69.3/100r, which equals approximately 72/100r, which is 72 divided by the percentage return on your investment, which is the rule of 72.

[rose_brier]

You really are the hero of everything.

[miransh]

Then what’s the difference between this and rule of 79 in economics? Thanks for explaining 👍🏻

[UnboxShayari]

I need an honest answer. If I expect that my yearly interest rate would be 72%, then how many years will take to make my money double?

[bitAtheist]

For anyone who wants to know "why 72?" the answer is 69 (point 3).

If you have any amount and wish to double it at 1% per period of time, your amount will have doubled from your starting amount after 69.3 periods of doubling (natural log 2).

The rule is 72 because though marginally less accurate it is easier to calculate in your head and approximates well.

[FinancewithMinh]

Quick to check how approximately my money grows!

[alejandrobermudez]

hey so.. do you know everything or how do you put out tutorials on everything like every day?

[imyqbyz]

How do we calculate a daily interest rate? Not a yearly interest rate

[yes.....]

First comment



Thanks for the video

[ptrkmr]

His brain is like the library of babel with a functioning ctrl+f

[LinkRammer]

Rule 72: if it exists, there is a megalovania version of it

[elliottlava]

If it exists, there's a megalovania of it. Thats r72

[shubhampatwardhan]

Why 72 and not 100 if my money put in bank with 10% interested my money double in 10 year equating with 72 it's approximately 6 to 7