How accurate is the Rule of 72?

Very accurate for rates between 6% and 10%. At 8% the rule gives 9 years; the exact answer is 9.01 years — essentially perfect. At lower rates (2–3%) or higher rates (20%+) the error grows. For rates above 15%, a slightly more accurate divisor is 73 or 74.

Can I use it for inflation or debt?

Yes — the rule applies to any compound growth. At 4% inflation, prices double in about 72/4 = 18 years. At 24% APR credit card debt, the balance doubles in about 3 years if you make no payments.

Investing

Rule of 72 Calculator

The Rule of 72 is a mental math shortcut for compound growth: divide 72 by the annual return rate to get the approximate number of years needed to double an investment. It also works in reverse — divide 72 by the years to find the required rate. It is useful for quick comparisons without a calculator.

Rule of 72

How it works

Formula & methodology

Doubling Time (years) ≈ 72 / Annual Rate (%). Required Rate (%) ≈ 72 / Years to Double. The exact doubling time from compound interest is ln(2) / ln(1 + r), which equals about 69.3 / r for small r. The number 72 is used because it is close to 69.3 and has many integer divisors (2, 3, 4, 6, 8, 9, 12), making mental math easy.

Source: Investopedia: Rule of 72

Example

Worked example

Example: at a 6% annual return, 72 / 6 = 12 years to double. At 9%, 72 / 9 = 8 years. To double in 10 years, you need 72 / 10 = 7.2% annual return.

FAQ

Frequently asked questions

How accurate is the Rule of 72?: Very accurate for rates between 6% and 10%. At 8% the rule gives 9 years; the exact answer is 9.01 years — essentially perfect. At lower rates (2–3%) or higher rates (20%+) the error grows. For rates above 15%, a slightly more accurate divisor is 73 or 74.
Can I use it for inflation or debt?: Yes — the rule applies to any compound growth. At 4% inflation, prices double in about 72/4 = 18 years. At 24% APR credit card debt, the balance doubles in about 3 years if you make no payments.

Tips

Practical tips

Use this as a quick sanity check on investment pitches — if someone promises your money will double in 2 years, that implies a 36% annual return, which should raise serious red flags.
The rule works both directions: use it to estimate how fast a high-interest debt (like credit card debt) will double if left unpaid, not just for investment growth.

Results are estimates for general informational purposes only and do not constitute financial, tax, or legal advice. Always confirm important figures with a qualified professional or your lender before making a financial decision.