Rule of 72 Calculator: How to Double Your Money

Rule of 72 Calculator: How to Double Your Money March 14, 2012

There’s a simple calculation that everyone should know: The Rule of 72.  It’s an easy way to estimate how long it will take for you to double your money in terms of compound interest.  Now if you’re interested in learning how to calculate compound interest by hand, we take some time to review our past article.

So how does the rule of 72 work?  You simply divide 72 by the projected interest rate that you hope to earn.  The outcome will equal the approximate years that it will take for your money to double at that rate.

Rule of 72 Examples

We’ll give two different scenarios on how to use the Rule of 72.

Example 1:

You want to know how long it will take for your money to double if it is earning 5%.

Solution:  72 divided by 5 equals 14.4 (years).  It will take approximately 14.4 years for your money to double at 5%.

Example 2:

You want to know what interest rate you need to earn in order to double your money in 3 years.

Solution: 72 divided by 3 equals 24 (percent).  You will need to earn approximately 24% for three years to double your money.

Both examples show that you’re able to simply divide 72 by whatever factor you have.  If you know the number of years, your end result will be the percentage you need to earn.  If you know the percentage, the result will be the end year.  That’s because the rule of 72 calculator follows this basic algebraic formula:  72 / x = y

Why Know The Rule of 72?

It’s a simple way to see how long it will take to double your money, so why not know how to use the rule of 72!  It can be helpful in thinking about interest rates and how much you’ll have to earn (or how long you’ll need to invest) in order to double your money.

Did you know about the rule of 72 calculator before? 

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  • Hey Tim,

    You know what? The rule of 72 rings a bell. It seems like something that I learned in the past, but forgot about. This is powerful information to have; a very quick shortcut that can make some investment decisions much easier.

    Thanks a lot for sharing this little trick!

    Take Care,

    ~Jeremy

  • I always enjoy this rough estimate! It’s amazing how it works like that!

  • Fortunately, doubling your money is both a realistic goal that investors should always be moving toward, as well as something that can lure many people into impulsive investing mistakes.

  • Long-Term Returns

    Rule of 72 is a great little shortcut! One thing to keep in mind though is that for most investors what matters is post-inflation (aka “real”) return since costs of living go up with inflation. So a, say, 3% return which the rule of 72 tells you will double your money in ~24 years is not actually all that great since cost of living will also approximately double in the same period of time. As a good rule of thumb subtract 3% from your rate of return to account for inflation and then apply rule of 72. E.g. your bonds pay you 5% interest; how long will it take to double your money in real terms? Answer: first we subtract 3% from 5% to get real rate of return of just 2%. Then applying rule of 72 we get 72 /2 = 36 years to double the real, inflation-adjusted money. And of course this is all ignoring taxes, which make things even bleaker.

  • It would be interesting to know why the number is 72? Although it looks like doubling your money through a bank account at the current rates of interest is going to take a very long time.

  • I have added this write-up to my social bookmarks

  • “Double your money, fast!” Do those words sound like the tagline of a get-rich-quick scam? If you want to analyze offers like these or establish investment goals for your portfolio, there’s a quick-and-dirty method that will show you how long it will really take you to double your money.