The Rule of 72 is a mental-math shortcut that tells you roughly how many years it takes for money to double at a given annual rate of return. It needs no calculator and is surprisingly accurate for everyday rates.
The formula
Years to double ≈ 72 ÷ annual interest rate (%)
At 8% a year, 72 ÷ 8 = 9, so your money doubles in about nine years. At 6%, about twelve years. The rule assumes returns compound and are reinvested.
How accurate is it?
The exact doubling time is ln(2) ÷ ln(1 + r). Compared with the rule:
| Annual rate | Rule of 72 | Exact (years) |
|---|---|---|
| 4% | 18.0 | 17.7 |
| 6% | 12.0 | 11.9 |
| 8% | 9.0 | 9.0 |
| 10% | 7.2 | 7.3 |
| 12% | 6.0 | 6.1 |
Between roughly 6% and 10% the estimate is almost perfect. For very low or very high rates it drifts, and some people use 70 or 69.3 instead — but 72 is popular because it divides neatly by 2, 3, 4, 6, 8, 9 and 12.
Three practical uses
1. Investing
If a diversified portfolio averages 7%, money doubles about every ten years. A 25-year-old's investment could double about four times by 65 — growing to roughly 15 times its original value (1.0740 ≈ 15). That is why starting early matters so much.
2. Debt
The rule works against you too. An unpaid credit card balance at 24% APR doubles in roughly three years (72 ÷ 24). See how to stop that with the credit card payoff calculator.
3. Inflation
Divide 72 by the inflation rate to find how long it takes prices to double — or your cash to lose half its purchasing power. At 3% inflation that is about 24 years. Explore it with the inflation calculator.
Limits of the rule
- It assumes a constant rate. Real investment returns go up and down from year to year.
- It ignores taxes, fees and new contributions.
- It is an estimate — use a full compound interest calculation for planning.
For a precise projection with regular contributions, use the calculator below.