What is the Rule of 72?

The Rule of 72 is a simple mental math shortcut to estimate how long it takes an investment to double given a fixed annual rate of return. Simply divide 72 by the interest rate to get the approximate number of years.

The Formula

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

Why 72?

The number 72 is used because it's a good approximation of ln(2) × 100 (approximately 69.3) and has many convenient divisors (2, 3, 4, 6, 8, 9, 12). This makes the mental math easier while remaining reasonably accurate for rates between 6% and 10%.

Variations

• Rule of 70: More accurate for lower rates (1-3%)
• Rule of 69: Most mathematically precise but harder to compute mentally
• Rule of 72: Best for rates between 6-10%

Practical Applications

• Investment Planning: Estimate retirement account growth
• Comparing Returns: Quickly compare different investment options
• Inflation Impact: Calculate how fast prices double (use for inflation rates)
• Debt Growth: See how quickly debt doubles if unpaid