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Rule of 72

The Rule of 72 is a mental-math shortcut: years to double money = 72 / annual return rate (%). At 6% return, money doubles in 12 years; at 9%, in 8; at 12%, in 6. Useful for quick comparisons; accurate for typical investment rates (6-12%).

Updated May 2026 · 4 min read
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Definition

The Rule of 72 is a mental-math shortcut: years to double money = 72 / annual return rate (%). At 6% return, money doubles in 12 years; at 9%, in 8; at 12%, in 6. Useful for quick comparisons; accurate for typical investment rates (6-12%).

What it means

Mathematically, doubling time equals ln(2) / ln(1 + r), or about 0.693 / r for small r. The 72 in the rule comes from a slight rounding that works well for 6-12% rates (where most consumer math lives). At very low rates (1-3%) the rule overestimates doubling time slightly; at very high rates (20%+) it underestimates. Variants exist — Rule of 70 for academic use, Rule of 69.3 for continuous compounding — but 72 wins because it has more whole-number divisors (2, 3, 4, 6, 8, 9, 12) for clean mental math.

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Formula

doubling_time_years ≈ 72 / annual_rate_percent

Why it matters

The Rule of 72 enables instant comparisons that would otherwise require calculator. “Should I invest at 7% or 9%?” → 72/7 = 10.3 years to double, 72/9 = 8 years to double. That’s 5 doublings vs 3.75 doublings over 30 years — a 32x vs 13x multiplier. The Rule of 72 also illustrates the power of compounding: each doubling is bigger than the last in absolute dollars. $10K becomes $20K, then $40K, then $80K — the late doublings add the most.

Example

$10,000 at 6% return: doubles in ~12 years to $20,000; doubles again to $40,000 by year 24; doubles again to $80,000 by year 36. At 8%: doubles in 9 years, 4 doublings over 36 years = $160,000. Rule of 72 makes this instant.

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Frequently asked questions

How accurate is the Rule of 72?

Within 1% for rates between 6-10%. Less accurate at very low (1-3%) or very high (20%+) rates. For a more precise mental shortcut at high rates, use Rule of 70 + add 1 to rate (e.g., 24% → 70/25 ≈ 2.8 years).

Does it work for inflation?

Yes — “years to halve purchasing power” = 72 / inflation rate. At 3% inflation, money halves every 24 years. At 6% inflation, every 12 years.

What about debt?

Same math in reverse. Credit card at 24% APR: debt doubles in 3 years if you don’t pay it down. Sobering.

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