Rule of 72

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Use this formula to determine how long it will take to double your money based upon an annual rate of return. The Rule of 72 is a rule of thumb that can help you compute when your money will double at a given interest rate. Just divide the annual rate of return you expect to receive and divide it into the number 72 and it will tell you how long it will take to double your money.

For example, if you can get 8% a year on your investments, your money will double every 9 years (72 divided by 8). If you can get 12%, your money will double every 6 years. If you can only get 4%, it will take you 18 years to double your money.

The Rule of 72 will also work in reverse if you borrow money. If you choose to have your money working against you rather than for you, the Rule of 72 will work in reverse. If you borrow $15,000 at 8%, and you don't make any payments on your debt, in 9 years you will owe $30,000.


\mbox{Years to double your money} = {\mbox{72} \over \mbox{rate of return}}

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