The Rule of 72 formula helps you quickly calculate how fast your money will double at a certain interest rate…
The Rule of 72 formula is an invention of a fifteenth century Italian mathematician named Luca Pacioli, aka “The Father of Accounting and Bookkeeping”.
Luca is quoted as saying:
The Rule of 72 Formula and Investing
This very rough translation of the rule of 72 formula means if you want to know how many years it will take to double your money, divide the interest rate into the number 72.
For example, if you have an annual interest rate of 6%, and divide 72 by 6, you will have 12, which is how long it will take to double your money.
So, if you were to invest in a dividend stock with an approximate 6% dividend, such as Iron Mountain (NYSE: IRM), you could expect your investment to double in approximately 12 years, assuming no change in the value of the stock.
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