The law of compounding is that reinvesting of interest earnings accelerates growth of capital significantly. Interest is the amount earned from investing the principal.
To calculate how long it will take for you to double your money based on a given interest rate you will apply the rule of 72. The Rule of 72 says that if you take 72 and divide it with the interest rate, the answer will be how many years it takes to double.
Below table illustrates the number of years it takes to double your investment with a given interest rate:
| Interest Rate | Years* |
|---|---|
| 3% | 24 years |
| 4% | 18 years |
| 6% | 12 years |
| 10% | 8 years |
| 12% | 6 years |