What does the rule of 72 help a person estimate?

The rule of 72 is a simplified formula that helps investors quickly estimate the number of years required to double their investment based on a fixed annual rate of return. By dividing 72 by the annual interest rate (expressed as a percentage), one can obtain an approximate time frame for when their investment will double in value. For instance, if an investment yields an annual return of 6%, using the rule of 72 would suggest it would take about 12 years for the investment to double (72 divided by 6 equals 12). This rule is particularly useful for investors who want a quick mental calculation without complex math, making it accessible and practical for everyday financial planning.

The other options do not correctly align with the purpose of the rule of 72. The best investment strategy is subjective and varies by individual circumstances, inflation rates are computed through more detailed economic analysis, and minimum returns for successful investments depend on various factors beyond just a simple rule.