Rule of 72: how long until your money doubles?
Divide 72 by the annual return and you have the approximate number of years for money to double. At 9% that is eight years; at 6% it is twelve. The calculator below gives the exact figure alongside the estimate.
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Why the shortcut works
The exact doubling time is the natural logarithm of two divided by the logarithm of one plus the rate. For rates between about 4% and 12%, dividing 72 by the percentage lands within a few months of the true answer.
The stat panel above shows the precise figure for the rate and compounding frequency you have chosen, so you can see how close the shortcut gets.
Use it in both directions
The rule works for anything that compounds, including debt and inflation. At 6% inflation, prices double in twelve years - which tells you what a fixed pension is worth after a couple of decades.
It is also a fast sanity check on any investment promising to double your money quickly. A promise of doubling in three years implies a 26% annual return, sustained.
Frequently asked questions
Is the rule of 72 accurate?
It is a close approximation for rates roughly between 4% and 12%. Outside that band, the error grows and the exact calculation above is better.
Why 72 and not 70?
Seventy is closer for continuous compounding, but 72 divides neatly by many common rates, which is why it became the popular version.
Can I use it for inflation?
Yes. Divide 72 by the inflation rate to see how quickly prices double and purchasing power halves.
Does it work for monthly compounding?
It is built for annual compounding, but the difference is small. The exact figure above accounts for whichever frequency you select.
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