The rule of 72 is a great estimation tool to replace a Future Value formula in finance. It is a relatively easy calculation, doable in your head with a grade 5 math level. The rule of 72 is simply a calculation of how long it will take to “double your money” using a specified rate of return. You take the rate of return and divide it by 72 giving you the appropriate amount of years needed for a double.
72 / 10% return = 7.2 years to double.
The formula can also be used inversely to calculate a reduction of half the capital using the inflation rate divided by 72.
72 / 2.5 = 28.8 years to have your capital halved
Inflation is often overlooked but should not be as it is an invisible tax and a consequence of investing too conservatively, (i.e T-Bills, Money Market)