The Rule of 72 is a shortcut for estimating how long an investment takes to double: divide 72 by the annual rate of return as a percentage. At 8% a year, 72 ÷ 8 = 9 years. To go the other way, divide 72 by the years you have to find the annual return you need.
How to calculate the Rule of 72
- Take the annual rate as a whole number, such as 8 for 8%.
- Divide 72 by that number: 72 ÷ 8 = 9.
- The answer is the approximate years to double, here 9 years.
Worked example: $10,000 at 8% a year doubles in about 9 years. The exact figure is ln(2) ÷ ln(1.08) = 9.006 years, and $10,000 × 1.08⁹ = $19,990, almost exactly double.
Formula
Doubling time (years) ≈ 72 ÷ Annual Rate (%)
Required rate ≈ 72 ÷ Target years
Why 72?
72 is divisible by 1, 2, 3, 4, 6, 8, 9, 12, and 24 — making mental math easy. The exact formula uses ln(2) ÷ ln(1 + r), but 72/r is accurate to within 1–2% for rates between 2–20%.
Doubling time by rate
| Annual rate | Doubling time |
|---|---|
| 2% | 36 years |
| 4% | 18 years |
| 6% | 12 years |
| 8% | 9 years |
| 10% | 7.2 years |
| 12% | 6 years |
| 24% | 3 years |
| 72% | 1 year |
Rule of 72 vs exact doubling time
| Annual rate | Rule of 72 | Exact | Error |
|---|---|---|---|
| 3% | 24.0 years | 23.45 years | +2.4% |
| 6% | 12.0 years | 11.90 years | +0.9% |
| 8% | 9.0 years | 9.01 years | −0.1% |
| 10% | 7.2 years | 7.27 years | −1.0% |
| 15% | 4.8 years | 4.96 years | −3.2% |
The rule is most accurate near 8%. For rates far above 20% the approximation drifts, so use the exact formula.
The Rule of 72 and inflation
Inflation uses the rule too. At 3% inflation, purchasing power halves in 24 years. This is why earning above inflation is essential for real wealth preservation.
Exponential growth applications
The Rule of 72 works for any exponential process: - SaaS ARR growth rate → years to double revenue - Population growth → doubling time - Debt at given interest rate → years to double what you owe
To measure the return itself, use the ROI calculator. To value a stream of future cash flows, use the DCF calculator.
Frequently asked questions
How do you calculate the Rule of 72? Divide 72 by the annual interest or growth rate as a percentage. The result is the number of years for the money to double. At 6% it takes 72 ÷ 6 = 12 years; at 12% it takes 6 years.
Why is the Rule of 72 used instead of 69.3 or 70? The exact constant is about 69.3 for continuous compounding. 72 is used because it divides evenly by 2, 3, 4, 6, 8, 9 and 12, and it is accurate for the common 6–10% range.
How accurate is the Rule of 72? It is within about 1% of the exact answer between 6% and 10%, and within roughly 3% from 2% to 15%. It becomes less accurate at very low or very high rates.
Can the Rule of 72 work for inflation or debt? Yes. At 3% inflation, prices double in 72 ÷ 3 = 24 years, halving purchasing power. A balance growing at 18% a year doubles in 4 years.
How do I find the return needed to double my money? Divide 72 by the number of years. To double in 6 years you need about 72 ÷ 6 = 12% a year.