Rule 72 is nothing special and should be viewed as common sense (Do not let others let you believe its a secret or innovative concept)
First mentioned by renowned Italian Mathematician Luca Pacioli in his book Summa de arithmetica, geometria, proportioni et proportionalita (1494); not Albert Einstein who most credit as popularizing the concept.
Rule 72 is a mathematical approach to guesstimating how long it will take for money invested to double based on interest/growth rate
Years to double money = 72 / rate of return on investment (or interest rate)
The Rule of 72 is focused on compounding interest that compounds annually.
For simple interest, you’d simply divide 1 by the interest rate expressed as a decimal. If you had $100 with a 10 percent simple interest rate with no compounding, you’d divide 1 by 0.1, yielding a doubling rate of 10 years.
For continuous compounding interest, you’ll get more accurate results by using 69.3 instead of 72. The Rule of 72 is an estimate, and 69.3 is harder for mental math than 72, which divides easily by 2, 3, 4, 6, 8, 9, and 12. If you have a calculator, however, use 69.3 for slightly more accurate results.
Rule of 72 works best in the range of 5 to 12 percent, but it’s still an approximation.
Food for thought:
Rule 72 is a limited concept
It relies on the fact that the interest rate will never change; no variance year to year
It does not take into account that we may add to our investment
Think about it: How long will it take to double your money?
You have $50,000 invested; average interest is 9% annually
You invest $100,000; average interest rate is 6% annually