The Rule of 72: How Fast Will Your Money Double?

The Rule of 72 is one of the most useful pieces of mental math in personal finance. It tells you, in seconds and without a calculator, roughly how long it takes money to double at a given rate of return — or how quickly a debt or inflation can eat into it.

The rule

At 8% a year, money doubles in about 72 ÷ 8 = 9 years. At 6%, it takes about 12 years. At 3%, about 24 years.

You can also run it backwards. If you want your money to double in 10 years, you need a return of about 72 ÷ 10 = 7.2% a year.

How accurate is it?

Very accurate for the rates most people deal with. Here is the Rule of 72 estimate compared with the exact doubling time for interest compounded once a year:

The estimate is almost perfect around 8% and drifts by a few months at very low or very high rates — close enough for quick decisions. You can check any scenario precisely with our compound interest calculator: for example, $10,000 at 8% compounded yearly grows to $19,990 after 9 years.

Why 72?

The exact doubling time is ln(2) ÷ ln(1 + r). Since ln(2) is about 0.693, the “perfect” number for continuous compounding would be 69.3. Bankers settled on 72 for two reasons: it slightly corrects for interest that compounds yearly rather than continuously, and it divides evenly by 2, 3, 4, 6, 8, 9 and 12, which makes mental math easy.

• Rule of 69.3 — most accurate for continuously or daily compounded interest.
• Rule of 70 — a common choice for low rates, such as inflation or economic growth.
• Rule of 114 and Rule of 144 — the same idea for tripling and quadrupling. At 8%, money triples in about 114 ÷ 8 ≈ 14 years.

Rule of 72, 70 or 69.3: which is closest?

All three rules divide a number by the rate. They differ in which kind of compounding they fit best. Here they are next to the exact doubling time, in years, for interest added once a year and for interest added continuously:

Three patterns stand out:

• For continuous compounding, the Rule of 69.3 matches the exact answer at every rate. Daily compounding is almost the same.
• For yearly compounding, the Rule of 70 is closest at low rates, around 1% to 3%. The Rule of 72 is closest from about 6% to 10%.
• At high rates, every rule comes in short. At 20% compounded yearly, money takes 3.8 years to double, not 3.6.

A simple fix for high or low rates: add 1 to 72 for every 3 points the rate is above 8%, and take 1 away for every 3 points below. At 20%, that gives 72 + 4 = 76, and 76 ÷ 20 = 3.8 years. At 2%, it gives 72 − 2 = 70, and 70 ÷ 2 = 35 years. Both match the exact figures. If you want to see why growth speeds up over time in the first place, our guide to simple vs compound interest shows it year by year.

Four practical ways to use it

1. See the long-term power of compounding

If $10,000 doubles every 9 years at 8%, then in 36 years it doubles four times: $20,000, $40,000, $80,000, $160,000. (The exact figure is $159,682.) Each doubling is bigger than the last, which is why the final years of long-term saving do so much of the work.

2. Understand what inflation does to cash

Inflation works like a negative return. At 3% inflation, prices double — and the buying power of cash under your mattress halves — in about 72 ÷ 3 = 24 years (the exact figure is 23.45 years). Money that sits idle for a working lifetime can lose most of its value.

3. Measure the true cost of fees

A 1% annual fee sounds small. But if it cuts your return from 7% to 6%, your doubling time stretches from about 10.2 years to 11.9 years. Over 36 years, $100,000 grows to about $1,142,000 at 7% but only $815,000 at 6% — a difference of more than $327,000 from a single percentage point.

4. See how fast debt can grow

Credit card balances compound against you. At a 24% APR, an unpaid balance roughly doubles in 72 ÷ 24 = 3 years. Because card interest is charged monthly, the real figure is even shorter — about 2.9 years. That’s why paying down high-interest debt is usually the best “investment” available.

Using it for inflation and debt

Inflation: use the Rule of 70 and your real return

Inflation rates are usually low, so the Rule of 70 is a good fit. At 2.5% inflation, prices double in about 70 ÷ 2.5 = 28 years. The exact figure is 28.1 years. Put another way, $1,000 in cash buys about what $500 buys today after 28 years.

For savings, what matters is the return left after inflation, called the real return. Say your investments earn 7% and inflation runs at 3%. The real return is 1.07 ÷ 1.03 − 1 = 3.9%, so your buying power doubles in about 72 ÷ 3.9 ≈ 18 years (exact: 18.2 years). Without inflation, the Rule of 72 would say about 10 years. Our guide to what inflation does to your savings has more examples, and you can run your own numbers in the inflation calculator.

Debt: use the APR and count the compounding

Card interest is quoted as a yearly APR but added more often than once a year. When interest is added monthly, the Rule of 70 is closer than the Rule of 72:

For example, a $5,000 balance at 24% APR, with interest added monthly and no payments, grows to about $10,199 after 3 years. Any payment smaller than the monthly interest charge lets the balance keep growing.

Limits of the rule

• It assumes a steady rate. Real investment returns go up and down from year to year.
• It ignores new contributions and withdrawals. For regular saving, use the compound interest calculator, which adds monthly deposits.
• It ignores taxes and fees unless you subtract them from the rate first.
• It gets less accurate at rates above about 20%.

Common mistakes

• Using a decimal. Divide by the rate in percent. 72 ÷ 8 = 9 years. 72 ÷ 0.08 = 900, which is not a doubling time at all.
• Mixing time units. The answer comes out in the same unit as the rate. A rate of 1.5% a month gives 72 ÷ 1.5 = 48 months, or 4 years, not 48 years. (The exact figure is 46.6 months.)
• Using the return before fees and taxes. A fund that earns 7% and charges 1% grows at about 6%. Use 6%: 72 ÷ 6 = 12 years, not 10.3.
• Using an average return for a bumpy ride. A gain of 20% one year and a loss of 10% the next average 5%, which suggests doubling in 72 ÷ 5 = 14.4 years. But $100 becomes $120 and then $108, which is growth of about 3.9% a year. At that pace, money doubles in about 18 years.
• Ignoring inflation. Doubling your dollars is not the same as doubling what they buy. Use the real return, as shown above.

Frequently asked questions

How long does it take money to double at 10%?

About 7.2 years by the Rule of 72. The exact figure is 7.27 years with yearly compounding and 6.93 years with continuous compounding.

Should I use the Rule of 70 or the Rule of 72?

Use 72 for investments that compound once a year at returns of about 6% to 10%. Use 70 for low rates such as inflation or economic growth, and for debt where interest is added monthly. Use 69.3 when interest compounds daily or continuously.

Does the Rule of 72 work for a savings account?

Yes. Use the APY, not the APR, because the APY already includes the compounding. At 4% APY, savings double in about 72 ÷ 4 = 18 years. The exact figure is 17.7 years.

Does the rule work if I add money every month?

No. The rule only covers a single amount left to grow. Regular deposits add to the balance, so it reaches double your starting amount much sooner. To see the effect, read how much $500 a month will grow or use the compound interest calculator.

This article is for general education and is not financial advice. Rules, rates and products vary by lender and country. See our disclaimer.