Wealth
The Rule of 72: How Fast Will Your Money Double?
Simple Math. Powerful Insight.
When it comes to investing, one of the most common questions is: How long will it take for my money to double? The answer doesn’t require a spreadsheet or a financial advisor—it just takes one elegant formula:
The Rule of 72.
What Is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it will take for an investment to double, based on its annual rate of return.
Formula:
\text{Years to Double} = \frac{72}{\text{Annual Return Rate}}
For example, if your investment earns 6% per year, it will double in:
\frac{72}{6} = 12 \text{ years}
This rule works best for interest rates between 4% and 12%, and while it’s not exact, it’s surprisingly accurate for planning and goal-setting.
Case Study 1: Jasmine, the Conservative Investor
Jasmine keeps her money in a high-interest savings account earning 3% annually.
Years to double:
\frac{72}{3} = 24 \text{ years}
She realizes that while her money is safe, it’s growing slowly. She decides to move part of her savings into a balanced ETF portfolio earning 6%, cutting her doubling time in half.
Lesson: Safety is good—but growth matters too.
Case Study 2: Mark, the DIY Investor
Mark invests in a diversified portfolio of index funds averaging 8% annual return.
Years to double:
\frac{72}{8} = 9 \text{ years}
He starts with $50,000. In 9 years, it becomes $100,000. In another 9, it’s $200,000. By year 27, it’s $400,000—all without adding another dollar.
Lesson: Time + compounding = exponential growth.
Case Study 3: Aisha, the Teacher Saving for Retirement
Aisha contributes $10,000 annually to her RRSP, earning 7% per year.
Years to double:
\frac{72}{7} ≈ 10.3 \text{ years}
She starts at age 30. By 40, her early contributions have doubled. By 50, they’ve doubled again. By retirement, she’s sitting on a portfolio that’s grown far beyond her expectations.
Lesson: Starting early makes all the difference.
Final Thought: Use It to Make Smarter Decisions
The Rule of 72 isn’t just a math trick—it’s a mindset shift. It helps you understand the power of compounding, compare investment options, and visualize your financial future.
Whether you’re saving for retirement, a home, or your child’s education, knowing how fast your money can grow helps you make smarter, more confident choices.
