Rule of 72
A simple way to estimate how long it will take to double your money.
The Rule of 72
The Rule of 72 is a mental math shortcut for estimating how long an investment will take to double given a fixed annual rate of return. No calculator needed.
How it Works
Simply divide 72 by the annual rate of return:
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
- At 12% return: 72 ÷ 12 = 6 years to double
- At 14% return: 72 ÷ 14 ≈ 5.1 years to double
Using the Rule in Reverse
You can also find what rate of return you need to double your money in a given time period:
To double your money in 4 years, you'd need approximately 18% annual return (72 ÷ 4 = 18).
Applying the Rule to Debt
The Rule of 72 also works for debt. At 24% credit card interest, your debt doubles in just 3 years (72 ÷ 24 = 3). This is why high-interest debt is so dangerous.
Applying the Rule to Inflation
At 7% inflation, prices double in about 10 years (72 ÷ 7 ≈ 10). This means ₹100 today will buy only ₹50 worth of goods in 10 years. Your investments must beat inflation to build real wealth.