For example, if you could achieve 20% consistently, you need about 3.6 years to double your money. How did I calculate that? Well, it's pretty easy - Just use 72 divided by 20. I guess I have enlightened some of you.
Rule 72 is important for me to assess if an investment or a person's track record is good in another angle. If an investment generates 8% per annum consistently, it needs 9 years to double in value, which is slow.
What about if you intend to double your money in 5 years' time? How much do you need to make per year? Well, the calculation can be done by 72 divided by 5 = 14.4% or 15% per year.
Hope you learn something new today. Happy Value Investing!