How long does it take for my money to double?
Divide 72 by the annual interest rate to estimate the years your money needs to double. At 6% a year that gives 12 years, against 11.9 with exact compounding; at 9% it gives 8 years, against 8.04. The rule works best for rates between about 4% and 12%.
How to do it
- Find your annual rate as a plain numberUse the yearly rate: the APY for a savings account, or the expected annual return for an investment. A 6% rate becomes 6.
- Divide 72 by that number72 ÷ 6 = 12. The result is roughly how many years the balance takes to double, assuming the rate holds and earnings stay invested.
- Check with a compound interest calculator when the stakes are highFor a big decision, run the exact numbers. $10,000 at 6% compounded yearly reaches $20,000 in about 11.9 years, close to the rule's 12.
- Run it backward to find the rate you needDivide 72 by the number of years you have. To double in 10 years, you need roughly 7.2% a year.
Questions that come up
Does the rule of 72 account for inflation?
No, it only uses the rate you plug in. To see how fast your purchasing power doubles, take inflation off first. A 6% return with 3% inflation is roughly 3% in real terms, so 72 ÷ 3 gives about 24 years to double what the money can actually buy.
How accurate is it at very high or very low rates?
It drifts. At 20% the rule gives 3.6 years, while exact yearly compounding gives about 3.8. At 1% it gives 72 years against about 69.7. It is most accurate between roughly 4% and 12%. Outside that range, use a compound interest calculator for anything that matters.
Does it work for debt, like a credit card balance?
Yes, the same math applies to any balance growing at a compounded rate. An unpaid balance at 24% a year roughly doubles in about 3 years (72 ÷ 24). Real card balances also depend on how often interest compounds and on payments, so check your statement for the exact picture.
Full transcript
Divide 72 by your rate: years to double. Find your yearly rate, say 6 percent on savings. 72 divided by 6: about 12 years. A compound calculator says 11.9. At 9 percent, both land near 8. Close enough to do in your head.