If someone offers you an investment with a 7% return, how long will it take for your money to double? 10 years? 15 years?
You don't need a spreadsheet or a financial degree to answer this. You just need a simple mental math hack used by bankers and billionaires for decades: The Rule of 72.
It is the fastest way to estimate the power of compound interest (or the danger of debt). Use the calculator below to try it out, and then read on to learn the secret formula.
The Secret Formula
The math is incredibly simple. You take the number 72 and divide it by your Annual Interest Rate.
72 ÷ Interest Rate = Years to Double
Real World Examples
- The Stock Market (8%): 72 ÷ 8 = 9 Years.If you invest $10,000 in the S&P 500 today, it will likely be $20,000 in 9 years, and $40,000 in 18 years.
- High-Yield Savings (4%): 72 ÷ 4 = 18 Years.Safe, but slow.
- Big Bank Savings (0.01%): 72 ÷ 0.01 = 7,200 Years.This is why you should never leave too much cash in a standard savings account.
The Dark Side: Credit Card Debt
Compound interest cuts both ways. The Rule of 72 also tells you how fast your debt grows if you don't pay it off.
If you have a credit card with a 24% APR:
72 ÷ 24 = 3 Years
Your debt will double every 3 years. A $5,000 balance can turn into $10,000 in just 36 months if left unchecked. If you are stuck in this trap, use our Debt Destroyer Calculator immediately to find a way out.
How to Use This for FIRE
If you want to retire early, you need your money to double as fast as possible. This requires a high savings rate and a solid investment strategy. To see exactly when you will hit your first million, check out our Time to Millionaire Calculator.