Rule of 72 Calculator
Estimate how long it takes your investment to double
Calculate Doubling Time
Enter your expected annual return rate to see how long until your money doubles
Results
Example:
If your investment returns 8% annually, it will double in approximately 9.0 years (72 ÷ 8 = 9).
A $10,000 investment at 8% becomes $20,000 in 9 years, $40,000 in 18 years, and $80,000 in 27 years.
What is the Rule of 72?
The Rule of 72 is a simple mental math shortcut to estimate how long an investment takes to double. Divide 72 by your annual return rate to get the approximate number of years needed for your money to double through compound growth.
This rule works remarkably well for return rates between 6% and 10%, which covers most long-term stock market returns. The calculation gives you a quick way to understand investment growth without complex formulas.
How the Rule of 72 Works
The formula is straightforward: Years to Double = 72 / Annual Return Rate
6% return: 72 ÷ 6 = 12 years to double
8% return: 72 ÷ 8 = 9 years to double
10% return: 72 ÷ 10 = 7.2 years to double
12% return: 72 ÷ 12 = 6 years to double
Why Use the Rule of 72?
- Quick mental math for estimating investment growth
- Helps you understand the power of compound returns
- Compare different investment opportunities easily
- Set realistic expectations for long-term wealth building
- No calculator needed for rough estimates
When the Rule of 72 Works Best
The Rule of 72 provides accurate estimates for annual return rates between 6% and 10%. This range covers typical stock market returns. For rates outside this range, the estimate becomes less precise but still useful.
For very high or low rates, you can adjust the number. Use the Rule of 69 for continuous compounding, or the Rule of 70 for easier mental division. But for most investors, 72 works perfectly.
Real-World Applications
Investors use the Rule of 72 to quickly evaluate opportunities. If a stock historically returns 12% annually, you know your money doubles every 6 years. A bond yielding 4% takes 18 years to double your investment.
The rule also reveals the cost of inflation. At 3% inflation, your purchasing power halves in 24 years. This shows why your investments need to beat inflation to maintain real wealth.
Rule of 72 vs Precise Calculations
The Rule of 72 approximates the exact doubling time from compound interest formulas. For perfect accuracy, use our CAGR calculator or compound interest calculator.
But the beauty of the Rule of 72 is its simplicity. You can do the math in your head anywhere, anytime. This makes it perfect for quick decisions and initial planning.
Frequently Asked Questions
What is the Rule of 72?
The Rule of 72 is a simple formula to estimate how long an investment takes to double. Divide 72 by your annual return rate to get the approximate number of years needed for your money to double through compound growth.
How accurate is the Rule of 72?
The Rule of 72 is very accurate for return rates between 6% and 10%, which covers most long-term stock market returns. For rates outside this range, the estimate becomes less precise but still useful for quick calculations.
Can I use the Rule of 72 for any investment?
Yes, the Rule of 72 works for any investment that compounds over time - stocks, bonds, savings accounts, real estate, or business investments. It's particularly useful for comparing different investment opportunities quickly.