At 6% a year, money doubles in about 11.9 years with exact compounding. The rule of 72 gives 12.0 years, close enough for a quick estimate.
What the rule of 72 says
Divide 72 by the annual rate in percent and you get the approximate number of years to double. At 6% that is 72 ÷ 6 = 12.0 years. It works in your head, which is its whole point.
It is an approximation of exact compounding, where the doubling time is the logarithm of 2 divided by the logarithm of 1 plus the rate. The table puts both side by side.
Where the shortcut drifts
The rule is best between about 6% and 10%. At 10% it says 7.2 years against 7.3 exact. At low rates such as 3% the exact figure is 23.4 years.
At high rates the drift grows: at 20% the rule gives 3.6 years while exact compounding gives 3.8. Tripling at 6% takes 18.9 years.
Use it with real returns
The rate has to be the rate you actually earn after fees, and inflation shrinks what a doubled balance can buy. Try your own rate in the rule of 72 calculator, then model deposits and compounding frequency in the compound interest calculator.
| Annual rate | Rule of 72 | Exact |
|---|---|---|
| 2 % | 36.0 | 35.0 |
| 4 % | 18.0 | 17.7 |
| 6 % | 12.0 | 11.9 |
| 8 % | 9.0 | 9.0 |
| 10 % | 7.2 | 7.3 |
| 12 % | 6.0 | 6.1 |
FAQ
Is the rule of 72 accurate?+
It is a mental shortcut. At 6% it gives 12.0 years against 11.9 exact, and it drifts further at very low or very high rates.
How long to double money at 10%?+
About 7.3 years with exact compounding. The rule of 72 estimates 7.2.
Does the rule work for debt?+
Yes. A balance growing at 20% doubles in about 3.8 years if you pay nothing.