The Rule of 72 is the quickest piece of compounding arithmetic you can do in your head. It answers one question — how long until this doubles? — to within a few months.
The rule, checked
| Annual rate | Rule of 72 estimate | Exact years to double |
|---|---|---|
| 6% | 12.0 | 11.9 |
| 8% | 9.0 | 9.0 |
| 9% | 8.0 | 8.0 |
| 10% | 7.2 | 7.3 |
| 12% | 6.0 | 6.1 |
Four everyday uses
- Returns. At an assumed 9% a year, money roughly doubles every 8 years. Over 24 years it doubles three times — about eight times the original, before costs and taxes.
- Inflation. At 6% inflation, prices double about every 12 years. A ₹50,000 monthly budget today becomes about ₹1 lakh in 12 years.
- Costs. A one-point difference in return changes the doubling time noticeably: about 7.2 years at 10%, but 8 years at 9%. Over a long horizon, that is one fewer doubling.
- Debt. For illustration, an unpaid card balance compounding at 36% a year doubles in about two years.
Run it in reverse
Want money to double in 6 years? You would need about 72 ÷ 6 = 12% a year, compounded. The reverse is a useful sense-check: an offer to double money in three years implies roughly 24% a year, compounded — a rate that should prompt careful questions about the risk involved.
Its limits
- It is an approximation; at very low or very high rates it drifts from the exact answer.
- It assumes a steady rate. Market-linked returns vary from year to year.
- It ignores taxes, costs and additional contributions.
For exact figures, the CAGR Calculator finds the rate between two values and the Lumpsum Calculator projects growth on your assumptions. For the bigger picture, read how compounding really works.