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Explainer · 2 min
The Rule of 72
A simple shortcut for estimating how long it takes money to double. All rates below are hypothetical.
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The idea
Divide 72 by a yearly rate of growth to estimate how many years it takes to double. For example, 72 ÷ a hypothetical 6% = about 12 years.
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Watch it double
Balance: $80,000
Starting with $10,000 at a hypothetical 6% rate, the Rule of 72 estimates it doubles about every 12 years: $20,000 at year 12, $40,000 at year 24 and $80,000 at year 36.
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Try it
Rule of 72: 12 years · Exact: 11.9 years
Shows doublings of a hypothetical $10,000 within 36 years. By year 36 it's about $80,000 by the rule's estimate.
Move the slider to pick a hypothetical rate from 1% to 12%. The Rule of 72 estimate appears next to the exact answer. The Rule of 72 is an estimate. It's most accurate for rates between about 6% and 10%.
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It works in reverse too: inflation
Inflation shrinks what money can buy. At a hypothetical 3% inflation rate, 72 ÷ 3 = 24, so the purchasing power of $10,000 is cut roughly in half in about 24 years.
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Takeaway
Time and rate matter. Small differences add up.
Time and rate matter. Small differences add up.
The Rule of 72 is an estimate. It's most accurate for rates between about 6% and 10%. Rates shown are hypothetical and don't imply any IAM product earns these rates.
General education only, not individual insurance, financial, tax or legal advice. Examples are hypothetical and don't represent any specific product.