Rule of 72
Règle de 72 in French
Quick definition
The rule of 72 is a mental shortcut: divide 72 by an annual growth rate to estimate how many years money takes to double. At 6%, doubling takes about 12 years. It works on returns, and just as revealingly on costs.
The shortcut
Money growing at a steady rate doubles on a predictable schedule, and the rule of 72 finds that schedule without a calculator: 72 divided by the annual rate equals the years to double. It compresses the whole future value formula into arithmetic you can do in your head.
| Annual return | Years to double (72 / rate) |
|---|---|
| 2% | 36 years |
| 4% | 18 years |
| 6% | 12 years |
| 8% | 9 years |
| 10% | 7.2 years |
Why it works
Doubling under compound interest follows a logarithmic pattern, and 72 happens to sit close to the exact answer at everyday rates while dividing cleanly by 2, 3, 4, 6, 8, 9 and 12. That friendly divisibility is the whole trick.
Notice what the table teaches beyond the arithmetic: doubling time shrinks fast as the rate rises. Going from 2% to 8% does not make you four times better off over a lifetime; it gives you four doublings where you would have had one. That is compounding's real message, and the rule of 72 delivers it in one line.
Two clever inversions
Flip the rule and it answers a different question: 72 divided by the years equals the return you need. Want your money to double in 10 years? You need about 7.2% a year. Someone promising to double it in 5 years is implicitly promising about 14.4% a year, which tells you instantly how aggressive the pitch is.
The second inversion is pointing the rule at costs, because everything that compounds against you doubles on the same schedule. At 3% inflation, prices double in about 24 years, which means the purchasing power of an unindexed dollar halves over the same stretch. Fees tell a similar story by comparison: an investor earning 6% doubles their money in about 12 years, while the same portfolio earning 4% after a 2% MER needs about 18 years per doubling. Same market, six extra years every time the money doubles. And the sobering one: a credit card balance growing at 20% doubles in about 3.6 years if left unpaid.
Accuracy limits
The rule is at its best between roughly 4% and 12%, where it lands within a few months of the exact answer. At very low rates it overshoots slightly and at very high rates it undershoots, and it assumes a steady annual rate that real markets never deliver. Use it to sanity-check projections, size up pitches and feel the weight of a fee or a debt; use a real calculation, not the rule, when actual dollars are on the line. It is an estimate, not a plan.
In Canada
The rule of 72 earns its keep as a gut check on Canadian financial life: whether an advisor's projection implies a plausible return, how many doublings a 25-year-old's TFSA might see before retirement, what a fund's MER quietly costs in doubling time, and how quickly an untouched credit card balance snowballs. None of these require software; all of them require the reflex of dividing into 72.
Worked example: counting doublings
Liam, 25, invests $20,000 and averages 8% a year. The rule says his money doubles about every 9 years: $40,000 around age 34, $80,000 around 43, $160,000 around 52, and $320,000 around 61. Four doublings, no spreadsheet. The same arithmetic also shows why waiting hurts: starting at 34 instead of 25 does not cost Liam $20,000, it costs him the final doubling, roughly $160,000.
Related terms
Reviewed by Alexandre Bernier, CFP®, CIM®, PFP®·Updated August 2026