Divide 72 by the growth rate to get the doubling time; compounding is fast enough to be counterintuitive without it.
Pacioli published it in 1494. At 6% growth, doubling takes twelve years; at 10%, seven. It is the reason compound interest and exponential spread both defeat intuition without arithmetic.
In practice
- A saver told the fund returns 6% hears a number; told it doubles every twelve years, they open the statement.
- A fee of 1.5% a year against 0.2% costs roughly a third of the final pot over forty years, which the arithmetic shows and intuition does not.
- Further reading
- Wikipedia
- Subject
- Decision-making & Reasoning
- Essay
- Razors, rules and the tools of careful thought