Rule of 72

Tara Seegers, CFP® , RLP® , MMP

July 25, 2025

How long does it take to double your money? The rule of 72 is a simplified way to calculate exactly this, given a fixed annual rate of interest. Here’s how it works: divide 72 by the annual rate of return you receive on your investments, and that number is a rough estimate of years it will take to double your money (i.e., 72/rate of return = years it takes to double money).

Compounded Interest
The chart below helps illustrate the power of compounded interest over time. Keeping your money in a savings accounts earning 1 percent would take 72 years for your money to double. But investing that money to potentially earn an 8 percent return would double your money in less than 10 years. By trying different scenarios, you can see how even a slight difference in interest rates can have a pronounced effect on how quickly your money grows.

Age	4% for 18 Years	Age	6% for 12 Years	Age	8% for 9 Years	Age	12% for 6 Years
29	$10,000	29	$10,000	29	$10,000	29	$10,000
47	$20,000	41	$20,000	38	$20,000	35	$20,000
65	$40,000	53	$40,000	47	$40,000	41	$40,000
		65	$80,000	56	$80,000	47	$80,000
				65	$160,000	53	$160,000
						59	$320,000
						65	$640,000

Of course, these are hypothetical calculations, which are not predictions of actual performance. Investment principal and interest are not guaranteed and are subject to market fluctuation.

The Rule of 72 in Reverse
The rule of 72 can also be applied to understand the effects that inflation can have on your purchasing power. In this case, simply divide 72 by the inflation rate. For example, if the inflation rate were 3 percent, it would take 24 years (72 divided by 3) to reduce your purchasing power by half. If inflation were 6 percent, it would take only 12 years to reduce the value of money by half.

Below are examples of how inflation can affect the cost of common items.

	October 2003	October 2023
First‑class stamp	$0.49	$0.63
Gallon of regular gas	$1.60	$3.78
Gallon of milk	$2.91	$3.93

Bottom Line?
The effects of inflation on long‑term wealth are often overlooked. It is important to seek investments that outpace inflation to maintain your purchasing power into the future.