Rule of 72 [Finance] Law and Legal Definition

Rule of 72 as used in finance is a simplified way to determine how many years it takes to double money invested at a compound interest rate. For example, if a person invests $100 at a compound rate of 6%, according to rule of 72, it takes 12 years (72 divided by 6) for principal to double. Usually, when dealing with low rates of return, the Rule of 72 is fairly accurate.