The 72 Rule: Calculator, formula and when your money will double

With a 6 % return, your money doubles every 12 years. On the savings account with 0.5 %, it takes the following time for the balance to double 144 years. Same amount, same time frame – the only difference is the return.

The Rule of 72 Do the maths in your head: 72 divided by the rate of return as a percentage gives the number of years until the investment doubles. The calculator below shows you the steps for your amount; you’ll then see just how accurate the rule of thumb is and where it works the other way round: in the case of inflation and debt.

The 72 Rule: 72 divided by the annual rate of return, expressed as a percentage, gives you approximately the number of years it will take for your money to double. Conversely, 72 divided by the number of years gives you the required rate of return.

Example: With a 6 % return, it is 72 ÷ 6 = 12 years (exactly 11.9 years). CHF 10,000 will become CHF 20,000 after 12 years, CHF 40,000 after 24 years and CHF 80,000 after 36 years.

Doubling based on return (rule of thumb / exact): 1 %: 72.0 / 69.7 years · 2 %: 36.0 / 35.0 years · 4 %: 18.0 / 17.7 years · 6 %: 12.0 / 11.9 years · 8 %: 9.0 / 9.0 years · 10 %: 7.2 / 7.3 years.

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What is the Rule of 72? Simple Rule of 72 Explanation

The Rule of 72 is a Rule of thumb for compound interest. It answers a question that would otherwise require you to use logarithms: how long does it take for a sum to double at a given rate of return?

The answer is a division. 72 divided by the annual return as a percentage, done. The result is years.

72 ÷ expected return = number of years until doubling

Example: In the case of a Yield from 8 % It takes about 9 years, until your money doubles (72 divided by 8 = 9). With 4 %, it takes 18 years; with 2 %, it takes as many as 36.

The number 72 is no coincidence. It is divisible by 2, 3, 4, 6, 8, 9 and 12 – in other words, by almost all the rates of return encountered in everyday life. That is why the rule works in your head, without a calculator. If you want to be precise, take the Rule of 72 calculator above, which shows the rule of thumb and the exact value side by side.

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Rule of 72 calculator

Wear it Rule of 72 calculator Enter an amount and a rate of return above, or click one of the suggestions. It shows the formula, the exact value next to it and the A staircase that doubles in size over 40 years, always compared to a savings account. In the second approach, you work it out the other way round: what rate of return do you need to double your money in 10 years? Answer: 7.2 %. No savings account can manage that; a global ETF has historically done so, though there’s no guarantee.

Years to double – rule of thumb and exact figure

Annual return	Rule of 72	Exactly
1 %	72.0 years	69.7 years
2 %	36.0 years	35.0 years
4 %	18.0 years	17.7 years
6 %	12.0 years	11.9 years
8 %	9.0 years	9.0 years
10 %	7.2 years	7.3 years

Annualised return, excluding tax, fees and fluctuations. Exactly: ln(2) ÷ ln(1 + return). For 8 %, the rule of thumb is practically spot on; below this level, it overestimates the return; above it, it underestimates it.

How accurate is the Rule of 72?

The exact formula is ln(2) divided by ln(1 + rate of return). The figure 72 is an approximation, which between 4 and 10 % – almost perfect It’s about right. If it’s a bit too long, it’s a bit too short. It’s good enough for mental arithmetic, but for a financial plan, you’ll need the exact figure.

Some people expect the 70s rule, particularly when interest rates and inflation are low, because 70 divides more evenly by 2 and 3.5. For yields of 5 % or higher, 72 is the better figure. At 8 %, both figures are almost exactly the same – that’s the sweet spot of the rule of thumb.

The 72 Rule in reverse: inflation and debt

The rule applies to everything that grows at a steady rate. Even to the things that work against you.

Inflation: With 1 % inflation, the purchasing power of your money is halved in 72 years. With 2 %, it is halved in 36 years; with 3 %, in 24 years. Anyone who leaves CHF 50,000 in their account will, after 24 years at a rate of 3 %, still have the purchasing power of CHF 25,000, even though the figure on their statement will not have decreased.

Consumer credit: At an interest rate of 9 %, a debt doubles in 8 years if you only pay the interest. This is the Rule of 72 with the sign reversed, and the reason why you must clear off expensive debt before making any investment.

How you can make decisions easier in everyday life with the rule of 72

Let's say you are thinking of making one of the following two investments:

Investment 1 is a ETF on the SPI with 0.3% fees per year. From the SPI you expect 7% return per year. Deducting the annual fee results in a net return of 6.7% per year.
Investment 2 is a active fund with 1.0% fees per year. The fund has the SPI as benchmark and you therefore also expect 7% return per year. Deducting the ongoing charges results in a net return of 6.0% per year.

Now when does which of the above Investments a doubling?

With the rule of 72 we can calculate that it is just under 11 years would take until Investment 1 doubled (72 divided by 6.7 = 10.7).
With investment 2 it takes 12 yearsuntil Investment 2 doubled (72 divided by 6.0 = 12).

So if you're looking for a faster return, Investment 1 might be the better choice for you.

3 important tips for implementing the Rule of 72 in everyday life

Three things that turn a rule of thumb into a decision:

Base your calculations on the net return. Fees are deducted before the 72 rule is applied, not after. In the example above, the difference of 0.7 % in fees amounts to around 1.3 years per doubling. Over 36 years, that amounts to three doublings instead of four, i.e. half the final value of the portfolio.
Leave compound interest alone. This rule only applies if returns are reinvested. Dividends paid out that you spend break the compounding effect.
Think in terms of doubling, not percentages. «6 % instead of 4 %» doesn’t sound like much. «Every 12 years instead of every 18 years» means that in 36 years’ time, you’ll have eight times as much instead of four times as much. That’s the question you should ask yourself when comparing a savings account, a 3a account and an ETF.

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Conclusion - When to use the Rule of 72 and its benefits

The 72 rule is not a calculation aid; it is an argument. It shows that when building up wealth The return determines the pace, not the amount saved. The difference between 0.5 % and 6 % is not 5.5 percentage points, but 132 years.

For mental arithmetic, 72 will do; for the plan, use the exact figure from the calculator. And if you want to see what regular saving does to the geometric progression, carry on to the Compound interest calculator.