What is the Rule of 72?
The Rule of 72 is a mental shortcut for compound growth: divide 72 by the annual interest rate to estimate how many years it takes for money to double. At 6%, money doubles in about 72 ÷ 6 = 12 years. At 9%, it doubles in about 8 years.
Why it works
Compound interest grows exponentially. The exact doubling time is ln(2) ÷ ln(1 + r), and for typical rates between 4% and 12% that result is very close to 72 divided by the percentage. For very low rates, 70 gives a slightly better estimate; for higher rates, 72 or even 73 is closer.
Examples
A savings account paying 4% doubles in about 18 years. A long-term investment averaging 7% doubles in roughly 10 years, which means $10,000 could become $20,000 in a decade, $40,000 in two decades and $80,000 in three decades. Enter these numbers in our compound interest calculator to see the exact figures year by year.
It works for debt and inflation too
Credit card debt at 24% doubles in only three years if left unpaid, which shows why high-interest debt is so dangerous. Inflation also follows the rule: at 3% inflation, prices double in about 24 years, so the purchasing power of cash halves over the same period.
Time is the biggest factor
Because doubling repeats, starting early matters more than investing larger amounts later. Someone who invests $5,000 at age 25 at 7% sees it double about four times by 65, to roughly $80,000. Starting the same amount at 45 gives only two doublings, about $20,000.
Limitations
The rule assumes a constant rate and reinvested returns. Real investments fluctuate, fees and taxes reduce growth, and past returns don't guarantee future results. Use the rule for quick comparisons, then run precise numbers with a calculator.
Quick reference
2% ≈ 36 years, 3% ≈ 24 years, 4% ≈ 18, 5% ≈ 14.4, 6% ≈ 12, 8% ≈ 9, 10% ≈ 7.2, 12% ≈ 6 years to double.
Frequently asked questions
How do you use the Rule of 72?
Divide 72 by the annual interest rate to estimate the years needed to double your money.
How long does money take to double at 7%?
About 10 years.
Is the Rule of 72 exact?
No, it's an approximation that's most accurate between roughly 4% and 12%.
Does the Rule of 72 apply to debt?
Yes. Unpaid debt at 24% roughly doubles every three years.