Rule of 72
Estimate how many years it takes to double an investment.
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The Rule of 72 is a simple mental math shortcut to estimate how long it takes an investment to double, or what growth rate is needed to double in a given time. Divide 72 by the annual return rate to get years to double.
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Tip: Use Rule of 115 to estimate tripling time: 115 / rate. Use Rule of 144 for quadrupling: 144 / rate.
- 1Years to double = 72 / Annual Interest Rate (%)
- 2Rate needed to double = 72 / Number of years
- 3Works best for rates between 6% and 10% (±1 year accuracy)
- 4For continuous compounding, use 69.3 instead of 72
8% annual return=Doubles in ~9 years (72/8)Actual: 9.01 years
Want to double in 6 years=Need ~12% return (72/6)Actual rate: 12.25%
| Annual Rate | Years to Double | Actual Years |
|---|---|---|
| 2% | 36 years | 35.0 |
| 3% | 24 years | 23.4 |
| 6% | 12 years | 11.9 |
| 8% | 9 years | 9.0 |
| 10% | 7.2 years | 7.3 |
| 12% | 6 years | 6.1 |
| 18% | 4 years | 4.2 |
| 72% | 1 year | 1.3 |
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Fun Fact
The Rule of 72 also works in reverse for debt. At 18% credit card interest, your debt doubles in just 4 years if you make no payments. At 24% payday loan rates, it doubles in 3 years.
References
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