The shortcut
The Rule of 72 estimates how long an investment takes to double with compound interest. Divide 72 by the annual rate; the answer is the approximate number of years. It works the other way too: divide 72 by the years you have, and you get the return needed to double.
Years to double ≈ 72 ÷ interest rate
Rate needed ≈ 72 ÷ years
Exact: years = ln(2) ÷ ln(1 + r)Worked example
How accurate is it?
The rule is most accurate for rates between about 6% and 10%. For very low rates, 69 or 70 gives a closer answer; for high rates, 76–78 does better. For a quick decision it's more than good enough, which is why it's popular with bankers and investors.
Related rules
- Rule of 114: divide 114 by the rate to estimate the time to triple your money.
- Rule of 144: divide 144 by the rate to estimate the time to quadruple it.
- Debt works the same way: an unpaid credit card balance at 42% a year doubles in under two years.
What it teaches
A few percentage points make an enormous difference over a lifetime. At 6%, money doubles every 12 years: three doublings in 36 years turns ₹1 lakh into ₹8 lakh. At 12%, it doubles every 6 years: six doublings turn the same ₹1 lakh into ₹64 lakh. That's why low-cost, long-term investing matters, and why high-interest debt is so dangerous.
For exact figures with your own numbers, use the lumpsum or compound interest calculators. For a Kisan Vikas Patra, see the KVP calculator.
Frequently asked questions
Why 72?
72 is close to the exact value (about 69.3 × a small adjustment for typical rates) and divides neatly by many numbers: 2, 3, 4, 6, 8, 9 and 12.
Does the Rule of 72 work for SIPs?
Not directly. It applies to a single lump sum growing at a fixed rate. For monthly investing, use the SIP calculator.
Can I use it for inflation?
Yes. Divide 72 by the inflation rate to see how quickly prices double and your money's buying power halves.