Rule of 72

Personal Finance
Updated Apr 2026 • Has calculator

A shortcut to estimate how many years it takes to double an investment at a given annual return.

What is Rule of 72?

The Rule of 72 is a mental math shortcut for estimating the number of years required to double an investment at a fixed annual rate of return. Divide 72 by the annual return percentage to get the approximate doubling time. It is accurate to within a year for rates between 6% and 10%. For more precise doubling time, use the exact formula: ln(2) / ln(1 + r). The rule also works in reverse—divide 72 by the number of years to find the required return rate.

Formula

Years to Double ≈ 72 ÷ Annual Return (%)

Worked Example

Worked example — S&P 500 historical return — long-run average

Long-run historical

Step 1  S&P 500 average annual return (nominal): ~10%
Step 2  Years to double = 72 ÷ 10 = 7.2 years
Step 3  Exact answer: ln(2) / ln(1.10) = 7.27 years
Step 4  Rule of 72 is off by only 0.07 years — highly accurate at 10%
Step 5  → At 7% (inflation-adjusted), doubling takes 72/7 ≈ 10.3 years

Source: Damodaran, A. — Historical Returns on Stocks, Bonds and Bills (2024-01-01)

Calculate Rule of 72

Expected annual rate of return or interest rate

Years to Double

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Not investment advice.

How to Interpret Rule of 72

< 5
Doubles in < 5 years — high return (or high risk)
5 – 10
5–10 years — strong long-term compounding
10 – 15
10–15 years — moderate return; typical balanced portfolio
> 15
Over 15 years — conservative or inflation-level returns

📚 FIRE Planning — Complete the path

  1. FIRE Number
  2. Safe Withdrawal Rate
  3. Coast FIRE
  4. CAGR
  5. Rule of 72
Sources
  1. Damodaran, A. — Historical Returns
  2. Investopedia — Rule of 72