INVESTING

Rule of 72 Calculator

The Rule of 72 is a quick mental shortcut for working out how long an investment takes to double. Divide 72 by your annual return and you get roughly how many years your money takes to double. This calculator shows that estimate next to the exact figure, so you can see how close the shortcut is.

How to use this rule of 72 calculator

1. Enter the annual rate of return you expect. Your brokerage statements or the fund’s own pages show its past returns, and a long run average is a more honest guide than one good year.
2. Enter your starting amount, the sum you have invested now or plan to invest.
3. Enter a target number of years to double, if you have a goal in mind. This field is optional, and it shows the return you would need to double your money in that time.
4. Press Calculate. You will see the years to double by the Rule of 72 estimate, the years to double by the exact figure, the amount your money doubles to, and the return needed to double in your target years.

A worked example

Say you invest $25,000 and it grows at 8% a year.

Divide 72 by 8 and the Rule of 72 says your money doubles in 9.00 years. The exact figure is 9.01 years, so the shortcut is out by only a few days at this rate. Your $25,000 doubles to $50,000.

Now enter 12 as the target years. The calculator shows you would need a return of 6.00% a year to double your money in 12 years, so an 8% return puts you ahead of that pace. Run the same sum at 4% and the doubling time stretches to about 18 years, which is why a few points of return matter so much over a lifetime of investing.

Investor.gov, the U.S. Securities and Exchange Commission’s education site, offers free investing guides and tools.

Related calculators

• Investment Calculator: project how regular investing could grow over time.
• Compound Interest Calculator: see how a lump sum or regular deposits grow with compound interest.
• Inflation Calculator: see how rising prices shrink the buying power of your money over time.
• ROI Calculator: measure the return on an investment as a percentage of what you put in.

How this rule of 72 calculator works

The exact way to work out doubling time uses logarithms. If your money grows at a fixed rate each year, the exact number of years to double is ln(2) divided by ln(1 + the rate), which is why the natural constant behind the rule is 69.3, not 72.

72 is close to that exact figure, and it divides neatly by many common rates: 2, 3, 4, 6, 8, 9 and 12. That makes the mental maths easy, so 72 became the standard shortcut even though 69.3 is the true constant.

The rule works best for returns in the 6% to 10% range, where its estimate is very close to the exact figure. At very low rates it drifts one way, and at very high rates it drifts the other, so for unusual rates it is worth checking the exact figure this calculator shows alongside the estimate.

Practical tips

• Use the rule for quick comparisons, not for final decisions.
• It works in reverse for inflation: divide 72 by the inflation rate to get the years it takes for your money to lose half its buying power.
• It also works for debt: divide 72 by a credit card APR to get the years it takes for an unpaid balance to double.
• Small differences in return matter a lot: over two or three doublings, even 1% a year more can leave you far ahead.

Frequently asked questions

What is the Rule of 72?

The Rule of 72 is a mental shortcut: divide 72 by your annual return to estimate how many years your money needs to double. At an 8% return, for example, 72 divided by 8 gives about 9 years.

How accurate is the Rule of 72?

Very close in the 6% to 10% range, where it is usually within a few months of the exact figure. It slightly underestimates the time needed at low rates and overestimates it at very high rates.

Can I use the Rule of 72 for inflation?

Yes. Divide 72 by the inflation rate and you get the years it takes for prices to double, or, put the other way round, for cash kept under the mattress to lose half its value.

Why 72 and not 69?

69.3 is the mathematically exact constant, but 72 divides by far more whole numbers: 2, 3, 4, 6, 8, 9 and 12 among them. That makes it much easier for mental maths, and it is close enough in the normal range of returns.