Want to know how long it takes to double your money? You don't need a calculator. The Rule of 72 gives you a remarkably accurate estimate in seconds.

What is the Rule of 72?

The Rule of 72 is a simple formula for estimating the time required to double an investment at a given annual return rate:

Years to Double = 72 / Annual Interest Rate

That's it. Divide 72 by your expected return, and you have your doubling time.

Examples

At 6% Return:

72 / 6 = 12 years to double

At 8% Return:

72 / 8 = 9 years to double

At 10% Return:

72 / 10 = 7.2 years to double

At 12% Return:

72 / 12 = 6 years to double

Why It Works

The Rule of 72 is a simplification of the compound interest formula. The actual formula for doubling time is:

Years = ln(2) / ln(1 + r)

Where ln is the natural logarithm and r is the interest rate as a decimal.

72 happens to be a close approximation that works well for interest rates between 6-10%—the most common range for investments. It's also conveniently divisible by 2, 3, 4, 6, 8, 9, and 12, making mental math easy.

Accuracy Check

The rule is most accurate around 8% and remains quite close for rates from 5-15%.

Practical Applications

Evaluating Investment Options

You're comparing a bond fund yielding 4% with a stock fund that historically returns 10%.

• Bond fund doubles in: 72 / 4 = 18 years
• Stock fund doubles in: 72 / 10 = 7.2 years

Over 30 years, your money doubles about 1.7 times in bonds vs 4+ times in stocks. That's a massive difference.

Understanding Inflation's Impact

Inflation at 3% means your purchasing power halves every:

72 / 3 = 24 years

$100 today will buy $50 worth of stuff in 24 years if you don't invest.

Debt Payoff Reality Check

Credit card debt at 18% doubles every:

72 / 18 = 4 years

A $5,000 balance becomes $10,000 in 4 years if you only pay minimums. This is why credit card debt is so dangerous.

Retirement Planning

If you're 30 with $50,000 invested:

• At 7% return, it doubles to $100,000 by age 40
• Doubles again to $200,000 by age 50
• Doubles again to $400,000 by age 60

Each doubling happens approximately every 10 years (72/7 ≈ 10.3).

Comparing Fee Impacts

A fund with 1.5% fees vs 0.1% fees:

Difference: 1.4% annually

That 1.4% drag means your money takes an extra 5 years to double (72/1.4 ≈ 51 years to halve your returns vs the low-fee fund).

Variations: Rule of 69 and Rule of 70

Rule of 69

More accurate for continuous compounding:

69.3 / rate = doubling time

Rule of 70

Simpler for mental math in some cases:

70 / rate = doubling time

All three give very similar results. Use whichever is easiest to divide in your head.

Working Backwards: Required Return

You can flip the formula to find the required return:

Required Return = 72 / Years to Double

Example:

You want to double your money in 5 years:

72 / 5 = 14.4% return required

This helps set realistic expectations. Doubling money in 3 years requires 24% annual returns—very aggressive.

The Rule of 72 and Multiple Doublings

Each doubling multiplies your money by 2:

At 8% returns (doubling every 9 years), over 36 years you'd experience 4 doublings: your money grows 16x.

$10,000 becomes $160,000.

Common Mistakes

1. Ignoring Inflation

A 6% nominal return with 3% inflation is really only 3% real return. Your purchasing power doubles in 24 years, not 12.

2. Forgetting Taxes

Investment returns are often taxable. A 10% return might be 7% after taxes, changing doubling time from 7.2 to 10.3 years.

3. Expecting Consistency

The Rule of 72 assumes steady returns. Real investments fluctuate. A 10% average might include years of -20% and +30%.

4. Confusing Return Types

Make sure you're using the same return type (nominal vs real, pre-tax vs post-tax) when comparing investments.

Key Takeaways

• Rule of 72: Years to Double = 72 / Interest Rate
• Works best for rates between 5-15%
• Useful for quick investment comparisons, inflation impact, and debt analysis
• Flip it for required returns: Rate = 72 / Years
• Remember that real-world returns are taxed and inflation-adjusted
• Each doubling multiplies wealth by 2x (2 doublings = 4x, 3 = 8x, etc.)

The Rule of 72 is one of those rare financial tools that's both simple enough to use in your head and accurate enough to be genuinely useful. Master it, and you'll be able to evaluate investment decisions on the fly.