The 72 theorem
In financial when we make an investment on x annual rate for y years, if x * y = 72, the return would be double.
| Principal | Interest Rate | Period | Return | Deviation |
|---|---|---|---|---|
| $1000 | 2% | 36Y | $2040 | +2.00% |
| $1000 | 3% | 24Y | $2033 | +1.75% |
| $1000 | 4% | 18Y | $2026 | +1.13% |
| $1000 | 6% | 12Y | $2012 | +0.60% |
| $1000 | 8% | 9Y | $1999 | -0.05% |
As a programmer, we are familiar that double 10 times will return ～1000x (2^10 = 1024), then double 20 times will return one ~million x.
Combine with the 72 theorem, it’ll be very helpful when estimate the index increase.