The Rule of 72
The Rule of 72 is a mental shortcut for compound growth. Divide 72 by the annual rate and you get a close estimate of how many years it takes money to double. Flip it around, divide 72 by a number of years, and you get the rate you would need to double in that time. No calculator required, which is exactly why it has stuck around.
Two examples
At an 8% return, money doubles in about 9 years, since 72 divided by 8 is 9. Want to double your money in 10 years instead? You would need roughly a 7.2% return.
It works against you too. At 6% inflation, prices double in about 12 years, which means the buying power of cash sitting idle is cut in half over that time. The same shortcut that shows savings growing also shows what inflation quietly does.
How accurate is it
It is an approximation, most accurate for rates roughly between 5% and 12%. Outside that range it drifts a little. For an exact figure use the compound interest calculator, but for a quick gut-check in your head, the Rule of 72 is hard to beat.
Frequently asked questions
Can I use it for debt?
Yes. Divide 72 by a debt's interest rate to see how fast the amount owed would double if it is left unpaid.
Why 72?
72 divides neatly by many numbers and closely matches the exact doubling maths for typical interest rates, making it easy to use mentally.
Is it exact?
No, it is an approximation. It is most accurate for rates around 6% to 10%. Use compound interest for precise results.
Does it work for inflation?
Yes. Divide 72 by the inflation rate to estimate how long prices take to double.