The Rule of 72 is a quick mental shortcut: divide 72 by the annual return to estimate how many years it takes for money to double. At 8%, money doubles in about 72 ÷ 8 = 9 years.
How accurate is it?
| Return | Rule of 72 | Exact |
|---|---|---|
| 4% | 18.0 years | 17.7 years |
| 6% | 12.0 years | 11.9 years |
| 7.1% | 10.1 years | 10.1 years |
| 8% | 9.0 years | 9.0 years |
| 10% | 7.2 years | 7.3 years |
| 12% | 6.0 years | 6.1 years |
| 15% | 4.8 years | 5.0 years |
For everyday returns between 6% and 12%, the rule is within a few months of the exact answer — good enough for quick decisions.
The real lesson: start early
Compounding rewards time more than amount. Compare two investors earning 12% a year:
- Asha invests ₹5,000 a month for 30 years (₹18 lakh in total) and ends with about ₹1,76,49,569.
- Ravi starts 10 years later and invests twice as much — ₹10,000 a month for 20 years (₹24 lakh in total) — and ends with about ₹99,91,479.
Asha invests less but ends up with more, simply because her money had ten extra years to compound.
Use it the other way too
The rule also shows how inflation erodes money: at 6% inflation, prices double roughly every 12 years. ₹1 lakh today will buy only about half as much in 12 years — which is why money left in a low-interest savings account quietly loses value.
Explore compounding with the compound interest calculator or the SIP calculator.