Finance
What is The Rule of 72?
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.
See it, don’t just read it.
Watch a 2-minute lesson with voice + animation that explains the rule of 72.
Key things to understand
- 1It estimates how long money takes to double.
- 2Divide 72 by the annual interest rate (as a percent).
- 3At 6%, money doubles in roughly 12 years.
- 4It's a fast approximation, not an exact formula.
Frequently asked questions
- 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.