The Rule of 72 is a quick way to estimate how long it takes money to double: divide 72 by the yearly rate of return.
How close the shortcut is
| Yearly rate | Rule of 72 | Exact (compounded yearly) |
|---|---|---|
| 2% | 36 years | about 35 years |
| 4% | 18 years | about 17.7 years |
| 6% | 12 years | about 11.9 years |
| 8% | 9 years | about 9.0 years |
| 10% | 7.2 years | about 7.3 years |
| 12% | 6 years | about 6.1 years |
It is most accurate around 6-10%, which is why it is popular for long-term investing estimates.
It works for debt too
A credit card at 24% doubles an unpaid balance in about 3 years (72 / 24). That is the same math working against you.
And for inflation
At 3% inflation, prices double in about 24 years. A savings account paying less than inflation loses buying power even while the balance grows.
Use it as a gut check
The rule is for quick comparisons, not planning. Real returns vary year to year, and fees and taxes slow growth. For a plan, use a compound interest calculator with your own deposits and rate.
Free tools
- Rule of 72 calculator: https://smartbudgetsheets.surge.sh/calculators/rule-of-72-calculator/?utm_source=mataroa
- Compound interest calculator: https://smartbudgetsheets.surge.sh/calculators/compound-interest-calculator/?utm_source=mataroa
- Inflation calculator: https://smartbudgetsheets.surge.sh/calculators/inflation-calculator/?utm_source=mataroa
- Debt Payoff Planner, up to 8 debts (Payhip): https://payhip.com/b/PtBLU?utm_source=mataroa
- 42 free budget templates, pay what you want ($0 is fine): https://smartbudgetsheet.gumroad.com/l/ngpkrb?utm_source=mataroa
General information, not financial advice. Figures are rounded examples.