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What is the Rule of 72?

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Quick answer

The Rule of 72 is a quick mental shortcut to estimate how long it takes money to double at a given interest rate. Just divide 72 by the annual rate: at 8% interest, money doubles in about 72 ÷ 8 = 9 years.

Key things to understand

  1. It estimates how long money takes to double.
  2. Divide 72 by the annual interest rate (as a percent).
  3. At 6%, money doubles in roughly 12 years.
  4. It's a fast approximation, not an exact formula.

People also ask

What is the Rule of 72?
A shortcut to estimate doubling time: divide 72 by the annual interest rate to get the years it takes.
How accurate is the Rule of 72?
It's a close approximation, most accurate for interest rates roughly between 6% and 10%.
Can the Rule of 72 work backwards?
Yes — divide 72 by the years to double to estimate the interest rate needed.

Part of the guide: Money Basics: Save, Borrow & Invest →