The Rule of 72

Divide the number 72 by the expected rate of return – the answer is the number of years it will take for a given sum to double at the expected compound rate of return.

Suppose your home is worth $400,000 today and you predict it will increase by 7% per annum. Divide 72/7% and the answer is close to 10.

If your prediction is correct, your house will be worth around $800,000 in 10 years time, and $1.6 million in 20 years time.

Any thoughts on this incredible rule?

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