Rule of 72 Calculator
The Rule of 72 is a simple mental math shortcut used in finance to estimate how many years it takes for an investment to double at a fixed annual rate of return. By dividing 72 by the annual interest rate percentage, you get a close approximation of the doubling time without needing a calculator or logarithm tables.
The reverse calculation is equally useful: if you know how many years you have to reach a financial goal, dividing 72 by that number tells you the annual return rate you need to achieve it. This makes the Rule of 72 a powerful tool for quickly evaluating investment options, comparing interest rates, or understanding the long-term impact of inflation on purchasing power.
How it works
Years to double ≈ 72 ÷ Annual Rate (%). Reverse: Required Rate (%) ≈ 72 ÷ Years. The exact formula uses the natural logarithm: t = ln(2) / ln(1 + r), but 72/r is accurate within 1% for rates between 6% and 10%.
Use cases
- Estimating how long a retirement account takes to double at a given return rate
- Comparing two investment options to see which doubles money faster
- Understanding how quickly inflation can halve your purchasing power
- Setting realistic savings goals based on available investment returns
- Teaching compound interest concepts in personal finance education