What’s the “rule of 70?”

The rule of 70 is an easy method of estimating how quickly a variable will double if you know its annual growth rate. If a variable is growing at a rate of x% per period, you simply take 70 and divide it by x.

The rule of 70 is useful for all sorts of applications. For example, if you’ve saved some money in an investment account that’s growing at 5% per year, you can divide 70 by 5 to get an approximation for how quickly your savings will double. No complicated math required.

But that’s not all! You can calculate how long it will take a country’s GDP to double, how quickly your startup’s users will double given its current growth rate, or when the number of bacteria in a petri dish will double. As you can see, there are many different applications of this rule!

In the video, we’ll walk you through a few scenarios where using the rule 0f 70 lets you easily see the power of compounding without the trouble of actually doing the compounding math. (Bonus: You’ll also learn how to apply the rule of 70 in reverse.)

MRU covers the rule of 70 in its video on "Growth Miracles and Growth Disasters" (http://bit.ly/2sWOMAj) in the Principles of Macroeconomics course. We also answer your questions on the rule of 70 in our Office Hours video on the topic (http://bit.ly/2shXHdZ).

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