The Rule of 72 is a quick and easy way to estimate the number of years it will take for an investment or the cost of goods to double based on a given annual inflation rate. Simply divide 72 by the annual inflation rate to get the approximate number of years. For example, if the inflation rate is 4%, it would take approximately 18 years for prices to double (72 ÷ 4 = 18).

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The Rule of 72 Is

Question 25

Multiple Choice

The Rule of 72 is:

A) A tool to determine the number of years until retirement for an employee
B) Used to estimate how fast prices will double using a given annual inflation rate
C) The legal code for requiring companies to provide a match on retirement savings
D) Used to calculate interest rates for savings
E) The number of steps required to complete a financial plan

Correct Answer: