The Rule of 72 is the most useful piece of mental math in personal finance. Divide 72 by your annual rate of return, and the answer is roughly how many years it takes your money to double. At 6% you double in 12 years. At 8% you double in 9. At 12% you double in 6. The rule is a close approximation to the exact compound interest formula — accurate within a few months across the range of returns most savers and investors actually experience — and it works equally well for inflation, debt growth, and currency erosion.
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Open Compound Interest Calculator →How the Rule of 72 Works
The formula is one line:
Plug in the rate as a whole number, not a decimal. A 9% return becomes 72 ÷ 9 = 8 years. A 4% return becomes 72 ÷ 4 = 18 years.
The rule comes from a linear approximation of the exact compounding formula. The exact answer is log(2) / log(1 + r), which gives 8.04 years at 9% — within a month of the Rule of 72's answer. Across rates between 6% and 10%, the rule is accurate to within about 0.3 years either way. Outside that range, it drifts a bit, which is why the variants in the next section exist.
Doubling Time by Return Rate
The table below compares the Rule of 72 estimate against the exact compounding answer at every common rate. The "exact" column uses years = log(2) / log(1 + r) with rate r as a decimal.
| Annual Return | Rule of 72 | Exact Years | Error |
|---|---|---|---|
| 2% | 36.0 | 35.00 | +1.00 |
| 3% | 24.0 | 23.45 | +0.55 |
| 4% | 18.0 | 17.67 | +0.33 |
| 5% | 14.4 | 14.21 | +0.19 |
| 6% | 12.0 | 11.90 | +0.10 |
| 7% | 10.29 | 10.24 | +0.04 |
| 8% | 9.00 | 9.01 | −0.01 |
| 9% | 8.00 | 8.04 | −0.04 |
| 10% | 7.20 | 7.27 | −0.07 |
| 12% | 6.00 | 6.12 | −0.12 |
| 15% | 4.80 | 4.96 | −0.16 |
| 20% | 3.60 | 3.80 | −0.20 |
Sweet spot is 6% to 10% — the rule is essentially exact. At 2% it overstates by a full year; at 20% it understates by about 2.4 months.
Rule of 72 at Real 2026 Rates
Plugging in the actual rates a US saver or investor faces in May 2026:
| Where the Money Sits | Typical Rate (2026) | Years to Double |
|---|---|---|
| Checking account (national avg) | 0.07% | ~1,029 years |
| High-yield savings (top APYs) | 4.0% | 18 years |
| 12-month CD (top APYs) | 4.3% | 16.7 years |
| Effective federal funds rate (May 21, 2026) | 3.62% | 19.9 years |
| S&P 500 100-year annualized total return | 10.4% | 6.9 years |
| S&P 500 50-year annualized total return | 11.7% | 6.2 years |
| Federal Reserve inflation target | 2.0% | 36 years (prices double) |
| Average credit card APR | ~22% | 3.3 years (debt doubles if unpaid) |
Sources: Federal Reserve H.15 release; long-term S&P 500 returns per Macrotrends; CD and savings rates from current top-of-market FDIC-insured banks.
When 72 Isn't the Right Number
Two close cousins extend the rule:
- Rule of 70 — slightly more accurate for low rates (under 5%) and for inflation work. At 2% inflation, 70 ÷ 2 = 35 years, which matches the exact answer to within months.
- Rule of 69.3 — the theoretically correct number for continuously compounded returns. Most retail investments compound annually or daily, not continuously, which is why 72 works better in everyday use. (The constant 72 was chosen partly because it divides cleanly by 2, 3, 4, 6, 8, 9, and 12 — useful before calculators.)
A second adjustment helps at high rates: add 1 to the divisor for every 3 percentage points above 8%. At 14%, use 72 + 2 = 74, giving 74 ÷ 14 ≈ 5.3 years — closer to the exact answer of 5.29 than the plain Rule of 72's 5.14.
Worked Example: $10,000 in Three Buckets
A 30-year-old has $10,000 sitting in cash and is choosing where to put it for 36 years (until age 66). Using the Rule of 72 to estimate the number of doublings, then the exact compound formula to get the precise ending balance:
| Bucket | Assumed Rate | Doublings in 36 yrs | Final Balance |
|---|---|---|---|
| Cash in checking | 0.07% | ~0 | $10,255 |
| High-yield savings | 4.0% | 2.0 | $41,039 |
| S&P 500 (long-run avg) | 10.4% | 5.2 | $352,884 |
The Rule of 72 isn't just a parlor trick — it makes the gap between savings rates and equity-like returns vivid before you spend any time on a spreadsheet. Two doublings versus five is the entire argument for owning equities long-term.
Project the exact growth for your own balance and time horizon:
Open Compound Interest Calculator →Frequently Asked Questions
What is the Rule of 72?
The Rule of 72 is a shortcut for estimating how many years it takes an investment to double at a fixed annual return. Divide 72 by the annual rate of return, expressed as a whole number. At 8% you double in roughly 72 ÷ 8 = 9 years. The rule works because of how compound interest behaves and is most accurate between rates of 6% and 10%.
How accurate is the Rule of 72?
Very accurate in the 6%–10% range — within a few months of the exact answer. At very low rates (below 4%) the Rule of 70 is closer, and at high rates (above 15%) you should add a small adjustment or just use the exact formula years = log(2) / log(1 + r).
How long does it take to double money at 7%?
At a 7% annual return, money roughly doubles every 10.3 years (72 ÷ 7 ≈ 10.3). The exact answer using the compound interest formula is 10.24 years, so the rule is off by less than a month.
How long to double money in the S&P 500?
The S&P 500 has returned about 10.4% annualized over the last 100 years with dividends reinvested, according to historical data summarized by Macrotrends and others. At 10.4%, the Rule of 72 says money doubles roughly every 6.9 years. Future returns are not guaranteed.
Does the Rule of 72 work for inflation?
Yes — it tells you how long it takes prices to double at a given inflation rate. At 3% inflation, prices double in about 24 years. At 2% (the Federal Reserve target), prices double in about 36 years.
Can the Rule of 72 estimate how fast debt grows?
Yes, and the answer is sobering. An unpaid credit card balance at a 22% APR doubles in about 3.3 years (72 ÷ 22). This is exactly why minimum payments rarely make a dent on high-rate consumer debt.
Sources & Further Reading
- Federal Reserve H.15 — Selected Interest Rates (daily) for current federal funds and Treasury yields.
- Macrotrends — S&P 500 Historical Annual Returns (1927–2026).
- Fidelity — Historical S&P 500 average return.
- SEC Investor.gov — Compound Interest Calculator for verifying exact compound math.
For informational purposes only. Not financial advice. Past investment returns do not guarantee future results — figures are current as of May 2026 and may change.