The rule of 72 is a mental shortcut for how long money takes to double at a steady yearly rate of return. Divide 72 by the rate as a whole number: at 6% a year, 72 ÷ 6 = 12, so the money roughly doubles in 12 years. It is an approximation of the exact formula, which is the natural logarithm of 2 divided by the natural logarithm of 1 plus the rate (about 11.9 years at 6%). The number 72 is used because it divides evenly by many common rates (2, 3, 4, 6, 8, 9, 12) and sits close to the exact answer for rates of roughly 6% to 10%. It works the same way for prices: at 3% inflation, 72 ÷ 3 = 24, so prices roughly double in 24 years, which means the same money buys about half as much.
Worked example
Say Fund A earns 6% a year and you put in $10,000. Rule of 72: 72 ÷ 6 = 12 years. Check with the exact formula: 1.06 to the power of 12 is about 2.012, so $10,000 becomes about $20,122 after 12 years, just over double. At other rates the shortcut drifts a little: at 2% it says 36 years while the exact answer is 35.0; at 12% it says 6 years against an exact 6.12; at 20% it says 3.6 against 3.80. Now the same arithmetic for prices: at 3% inflation, 72 ÷ 3 = 24, so something that costs $100 today costs about $200 in 24 years (the exact figure is 23.4 years).
Why it matters
The rule of 72 turns compounding into something you can feel without a calculator, and it shows how much a small difference in rate matters: at 4% money doubles in about 18 years, at 8% in about 9. It also makes the quiet cost of inflation concrete. The catch is that it is only an estimate. It is closest for rates of roughly 6% to 10%, drifts at very low or very high rates, and assumes one fixed rate with no fees, taxes or contributions along the way. Real returns vary from year to year, so a result is a rough guide to how compounding works, not a forecast of what any investment will earn. For a precise answer, use the exact formula or a compound interest calculator.
Frequently asked questions
Divide 72 by the yearly rate of return as a whole number. At 9% a year, 72 ÷ 9 = 8, so money roughly doubles in 8 years. Use the same steps with an inflation rate to see how long prices take to double.
It is closest for rates of roughly 6% to 10%. At 6% it gives 12 years against an exact 11.9, at 2% it gives 36 against 35.0, and at 20% it gives 3.6 against 3.80. It also assumes one fixed rate with no fees or taxes.
The exact doubling time is the natural logarithm of 2 divided by the natural logarithm of 1 plus the rate. Since the natural logarithm of 2 is about 0.693, the rule of 72 is a rounded shortcut for it.
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Built & maintained by Worthmap · Last updated November 1, 2026
Educational use only. This tool provides estimates for informational purposes and does not constitute financial, investment, tax, or legal advice. Results are based on inputs you provide and mathematical models, they do not guarantee future performance. Always consult a qualified financial adviser before making investment decisions.