The Rule of 72 is a simple mental-math shortcut for estimating how long it takes an investment to double at a given fixed annual rate of return. Simply divide 72 by the annual interest rate to get the approximate number of years. For example, at 8% per year, it takes roughly 72 / 8 = 9 years to double your money. The rule works best for rates between about 2% and 20%.

The exact doubling time uses the precise formula: t = ln(2) / ln(1 + r), where ln is the natural logarithm and r is the annual rate expressed as a decimal. For an 8% rate, the exact time is ln(2) / ln(1.08) = 9.01 years, which is very close to the Rule of 72 estimate of 9 years. For the tripling time, replace ln(2) with ln(3): t = ln(3) / ln(1 + r), which gives approximately 14.27 years at 8%.

The Rule of 72 is useful for quick calculations when evaluating savings accounts, investment returns, inflation's erosion of purchasing power, or debt growth. For instance, if inflation averages 3%, your purchasing power halves in about 24 years (72 / 3). If your credit card charges 18%, your unpaid balance doubles in just 4 years (72 / 18). Understanding this rule helps you quickly grasp the long-term impact of different growth rates.