How does the Rule of 72 work?
At a 6% annual return, 72 ÷ 6 = about 12 years to double your money. To double in 10 years, you need roughly 72 ÷ 10 = 7.2% a year.
| Rate | Rule of 72 | Exact |
|---|---|---|
| 3% | 24 yrs | 23.4 yrs |
| 6% | 12 yrs | 11.9 yrs |
| 9% | 8 yrs | 8.0 yrs |
| 12% | 6 yrs | 6.1 yrs |
Where else can I use it?
With 3% inflation, prices double—and your cash loses half its buying power—in about 24 years. A credit card balance at 24% APR doubles in about three years if unpaid. Accuracy drops at very high or low rates; 69.3 works better for continuous compounding. For precise math, use the present value formula.
FAQ
- Does it work for simple interest?
- No—it assumes compounding.
- Why 72?
- It's close to 100 × ln 2 (about 69.3) adjusted for annual compounding, and it divides evenly by many numbers.
Sources reviewed: 2026-10-25
References
- Brealey, R. A., Myers, S. C., & Allen, F. (2020). Principles of corporate finance (13th ed.). McGraw-Hill.