Rule of 72: how to calculate how long it takes for your money to double
The Rule of 72 is one of the most practical tools in finance for estimating how long it takes an investment to double in value. Simple, quick, and effective, it helps both beginners and seasoned investors understand the power of compound interest over time.
📌 What is the Rule of 72?
The Rule of 72 is an approximate formula that shows how many years it takes for money to double, assuming a fixed annual interest rate.
Time (years) = 72 ÷ Annual interest rate (%)Examples:
- Rate of 12% → 72 ÷ 12 = 6 years;
- Rate of 8% → 72 ÷ 8 = 9 years.
💡 Why use the Rule of 72?
The main advantage is its simplicity. No spreadsheets or financial calculators required: in seconds you can get a sense of the impact of interest rates. It is especially useful for:
- Planning: visualizing potential portfolio growth;
- Comparison: checking if one interest rate is better than another;
- Education: teaching the power of compound interest in a simple way.
⚠️ Limitations of the rule
While practical, the Rule of 72 is only an approximation:
- Most accurate with rates between 6% and 10% per year;
- Less precise with very low or very high rates;
- Assumes fixed annual rates, which may not reflect reality.
🔢 Practical example
If you invest $10,000 at an annual rate of 9%:
72 ÷ 9 = 8 years
In about 8 years, the amount would double to $20,000. At 18% per year, it would take only 4 years.
📉 And what about inflation?
The Rule of 72 can also show how fast inflation doubles prices. For example, if inflation is 6% per year: 72 ÷ 6 = 12 years. In other words, in 12 years, prices could double. This highlights the importance of investing above inflation.
💡 FlowZenHub Tip: the Rule of 72 is great for a quick mental calculation. For precise planning, use the Compound Interest Calculator and simulate deposits and real goals.
✅ Conclusion
The Rule of 72 is a valuable shortcut for understanding the effect of time and interest rates on money. Use it to plan, compare, and learn—but complement it with more detailed calculations when investing for real.
👉 Want to go further? Open our Compound Interest Calculator → and see how your money can grow over time.