← The Price of Waiting · Lesson 2 of 3
The rule of 72
A quick way to feel compound growth: divide 72 by the yearly percentage to get the years it takes to double. At an assumed 6%, 72 ÷ 6 = 12 years; the exact answer is 11.9.
Doubling is why waiting costs. At the same assumed 6%, thirty years multiplies a sum by about 5.7, and forty years by about 10.3. The ten extra years at the start nearly double the end, because they come before every other year’s growth.
The rule is a rule of thumb: it is close between about 4% and 12% and drifts outside that. Teenagers meet it as The Rule of 72 on Spark & Anvil, and younger children meet doubling by folding paper.
At an assumed 8% a year, about how many years does it take to double?
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