**Jakarta, CNBC Indonesia** – Any investor would be interested to know when their investment will double in the future. One simple way to estimate this is to use the Rule of 72 formula.

According to a Forbes report, the Rule of 72 is an easy-to-use formula to project when your investment will experience 100% growth.

How does the Rule of 72 work? The following is the explanation.

## Rule of 72 formula

If your investment produces a return of 8% every year, then it is estimated that in about nine years, the value of your investment will double or 100%.

Where do these numbers come from? The formula is simple, namely:

**72 : 8 = 9 years**

Keep in mind that the Rule of 72 applies with the assumption that the rate of return on an investment remains constant over a certain period and that the investment is made at one time or without additional capital additions in the future.

By understanding the Rule of 72, you can have a better estimate of the future growth potential of your investments. Let's prove it.

In the first year, a person places IDR 1 million in an instrument that can produce a net return of 8%. If he leaves his capital for 9 years, then Rp. 1 million will turn into Rp. 2.02 million.

The Rule of 72 formula applies because there is a compound interest factor in this calculation. The higher the interest on investment returns, the faster your investment capital will increase by 100%.

## When is it best to use this calculation

You can use this calculation the first time you want to do your first analysis of your long-term investment performance.

The Rule of 72 is a very simple formula, and does not require complicated analysis. However, considering that there are no investment returns that can be “guaranteed,” other than government debt securities, it would be a good idea to carry out an in-depth analysis of your investment.

You also have to manage your expectations regarding returns, because it is very likely that the investment results you get will still be far from your expectations.

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