How Long Will It Take To Double My Money? The Rule Of 72

The Rule of 72 is a simple calculation to determine how long it will take to double your money at a specific interest rate. For example, if your were expecting a rate of return of 7% you would divide 72 by 7, which tells you it would take about 10.3 years to double your money at that rate.

This also works the other way. If you knew you wanted to double you money in 12 years, you could divide 72 by 12, which shows you would need a 6% return to achieve this.

Not just for compound interest, the calculation could also be used to gauge the effect of inflation. For example, a 3% inflation rate would mean your money will lose half it’s spending power in 24 years. Certainly useful to know when planning your retirement!

Is the Rule of 72 accurate? No, but it’s close. While the examples above come within decimal points of the true calculation, smaller interest rates start to skew the numbers. If you where to properly calculate a compound interest of 1%, it would take just under 70 years to double, not 72. Still, not too bad for a quick calculation that dates back to the fifteenth century!

Written by Tom Drake

Tom Drake is the owner and head writer of Canadian Finance Blog. While you’re here, consider signing up for the RSS feed or email subscription. Both deliver the latest articles directly to you everyday! Have a Twitter account? Then follow me for all the latest posts or to send me any comments or questions!

7 Responses to How Long Will It Take To Double My Money? The Rule Of 72

  1. Sean says:

    This is a great trick for rough calculations. I remember learning it in high school math class, but thanks for the refresher!

  2. Amanda Rush says:

    Interesting calculation. But I guess it all depends on how well you manage your money.

  3. Steve Call says:

    Thank you for your useful post. But I had trouble navigating past your website as I kept getting 502 bad gateway error. Just thought to let you know.

  4. UltimateSmartMoney says:

    Very interesting… I have never heard of this rule of 72. It’s very handy… Thanks for sharing.

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