The rule of 72

Market briefing 31st March 2024 – The rule of 72

The Rule of 72 is a useful tool for estimating investment growth and understanding the impact of compounding returns. Although not always precise, it is an accessible and intuitive method that investors and financial educators find invaluable.

It is a potent mix when the Rule of 72 is combined with measuring the actual returns from investments, especially when these returns are contextualised against how they have performed against a suitable, understandable, and fair benchmark.

It is important to keep in mind that investors usually have a long-term investment horizon. When the Rule of 72 is combined with smart investing, which involves investing in different asset types like bonds and equities, across different geographical regions, investment styles like active management and index/passive investing, and different investment philosophies such as growth and value, it increases the likelihood of investors achieving their financial goals and life objectives in a timely manner.

Read our latest Market Briefing to find out more about why the rule of 72 is important

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