What Is the Rule of 72?
The Rule of 72 is a simple, powerful math shortcut that estimates how many years it takes for money to double using compound growth. It dates back to 1494, when Italian mathematician Luca Pacioli mentioned it in his famous book Summa de Arithmetica.
Years to Double ≈ 72 ÷ Annual Return Rate
Just remove the % sign and divide 72 by that number. No exponents. No complex equations.
Quick Examples
- 6% return: 72 ÷ 6 = 12 years
- 8% return: 72 ÷ 8 = 9 years
- 12% return: 72 ÷ 12 = 6 years
How Accurate Is It?
Between 6% and 10%, the error is tiny (less than 0.1 year). For real-life planning, this is more than accurate enough.
Real-World Uses
- Evaluate investments: Compare funds: 6% vs 4%? 12 years vs 18 years to double
- Understand inflation: If inflation is 3%, your cash loses half its value in 72 ÷ 3 = 24 years
- Spot misleading pitches: Someone claims 30% returns? Money doubles every 2.4 years — sounds too good?
Works best: For returns between 4% and 15%, stable compounding growth, long-term estimation.