New to this? Read the plain English guide first.
A quick way to estimate how long it takes to double your money.
The Rule of 72 is a mental shortcut. Divide 72 by your yearly return in percent and you get a close estimate of the number of years it takes for money to double. It is useful for quickly sizing up investments, fees and inflation.
Years to double is approximately 72 divided by the yearly return percentage. The exact figure uses the natural logarithm of 2 divided by the natural logarithm of one plus the return.
At 8 percent a year, money doubles in about 9 years, since 72 divided by 8 is 9. At 4 percent it takes about 18 years. At 12 percent it takes about 6. The rule works best for returns between about 5 and 15 percent.
Use it to see why starting early matters and why fees hurt. A fund charging 2 percent a year instead of 0.2 percent can cut your yearly return enough to add years to your doubling time. It also works for inflation: at 3 percent inflation, prices double in about 24 years.
Using it for very high or very low rates, forgetting that returns are not guaranteed and assuming the same return every year.
Read about index funds and try the dollar cost averaging calculator. See every term in the investing glossary, try more tools in investor tools, or test yourself in Stock Jeopardy.
For education only, not investment advice. Results are estimates based on the numbers you enter.