The Rule of 72 is a mental shortcut for estimating how long it takes for money to double at a given compound interest rate. Divide 72 by the annual interest rate, and the result is approximately the number of years until your investment doubles.
At 6% annual return: 72 ÷ 6 = 12 years to double. At 8%: 72 ÷ 8 = 9 years. At 12%: 72 ÷ 12 = 6 years. At 3%: 72 ÷ 3 = 24 years.
This is an approximation — the exact answer requires a logarithm — but it is accurate within a year or two across the range of rates most investors encounter, making it an extremely useful quick calculation.
The Rule of 72 also works in reverse. If you know roughly how long you want to double your money, you can estimate the required return. Want to double in 8 years? You need approximately 9% per year (72 ÷ 8 = 9).
It applies equally to the destructive side of compounding. At 24% credit card interest, your debt doubles in 3 years if you make no payments (72 ÷ 24 = 3). At 6% inflation, prices double in 12 years — meaning the purchasing power of uninvested cash is halved. This is why leaving money in a cash account earning less than inflation steadily erodes real wealth.
The rule is also useful for comparing scenarios quickly. Which grows faster: £10,000 at 5% or £5,000 at 10%? At 5%, the £10,000 doubles to £20,000 in about 14.4 years. At 10%, the £5,000 doubles to £10,000 in 7.2 years — and doubles again to £20,000 in another 7.2 years, reaching £20,000 at roughly the same time despite starting at half the amount. Higher returns can compensate for lower starting capital.
The Rule of 72 is a simple but powerful tool for building intuition about compound growth. It transforms abstract percentages into concrete, human-timescale thinking about how money grows.