Thumb rule to calculate rate of interest - Rule of 72

• If your money doubles in $x$ years, then the approximate rate of interest can be calculated using:

$$\text{Rate of interest}\simeq \frac{72}{x}$$

Example

• If your principal amount of Rs 1 lakh doubles to Rs 2 lakh in 15 years, then the approximate rate of interest $\simeq 72/15=4.8\%$.
• The exact rate of interest is $4.73\%$ which is quite close

Sources

• (Done) Let’s Talk Money - Highlights

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