Rule of 72 — How Long to Double Your Money
The Rule of 72 is a simple formula that estimates how long an investment will take to double at a given fixed annual rate of return.
Rule of 72
Years to Double = 72 / Annual Return Rate
Where:
- 72 = The constant used for approximation
- Rate = Annual interest/return rate (%)
Step-by-Step:
- 1
Know your rate
Determine the annual rate of return (e.g., 8%, 12%).
- 2
Divide 72 by the rate
72 ÷ rate = years to double.
Worked Examples:
FD at 7%
Rate: 7%
Result: ~10.3 years
72 / 7 = 10.3 years to double
Equity at 12%
Rate: 12%
Result: 6 years
72 / 12 = 6 years to double