The "Rule of 72" is a simple mathematical formula used to estimate the number of years required to double the invested money at a specified annual rate of return. By dividing 72 by the interest rate (expressed as a whole number), one can quickly gauge how many years it will take for an investment to grow to twice its original amount. This rule is particularly popular in personal finance and investment planning because of its ease of use and effectiveness, allowing individuals to make informed decisions regarding their investments and savings strategies.
The other options present different concepts that do not align with the primary function of the "Rule of 72." Comparing different interest rates involves more complex calculations and comparisons rather than a straightforward doubling estimate. Calculating taxes on investments is unrelated to investment growth rates and requires different financial considerations. Determining risk levels of investments refers to assessing the volatility and potential loss associated with an investment, which is also outside the scope of the Rule of 72's estimation of growth.