~1 min read
The Rule of 72 is a quick mental math shortcut for estimating how long compound interest takes to double an investment.
Formula
Doubling time (years) ≈ 72 ÷ Annual Rate (%)
Required rate ≈ 72 ÷ Target years
Why 72?
72 is divisible by 1, 2, 3, 4, 6, 8, 9, 12, and 24 — making mental math easy. The exact formula uses ln(2) ÷ ln(1 + r), but 72/r is accurate to within 1–2% for rates between 2–20%.
Doubling time by rate
| Annual rate | Doubling time |
|---|---|
| 2% | 36 years |
| 4% | 18 years |
| 6% | 12 years |
| 8% | 9 years |
| 10% | 7.2 years |
| 12% | 6 years |
| 24% | 3 years |
| 72% | 1 year |
The Rule of 72 and inflation
Inflation uses the rule too. At 3% inflation, purchasing power halves in 24 years. This is why earning above inflation is essential for real wealth preservation.
Exponential growth applications
The Rule of 72 works for any exponential process: - SaaS ARR growth rate → years to double revenue - Population growth → doubling time - Debt at given interest rate → years to double what you owe