Learn This Rule While Young
Jul 15, 2026
The Rule of 72
The Rule of 72 is a classic rule of thumb used in finance to estimate the number of years required to double your investment (at a fixed annual rate of return).
To calculate, divide 72 by the annual rate of return and this gives you the amount of years it should take to double your investment.
To illustrate this, let's use a 10% return as an example.
72 ÷ 10% = 7.2 years
The numbers would look like this. Let's say you start with $10,000 at 20 years old (ages are rounded).
- The earlier you start - I like to picture compounding as an upside-down triangle. When you start it's ever so boring but with every successive doubling, the triangle grows. It's the 'later doubles' that start to really get exciting, but you need the 'early doubles' to get yourself there.
- Return - 10% is admirable and makes this calculation easy to do. But, what happens if you decide to leave your money in a High Yield Savings account making a 3% return? Of course, with the denominator being so much lower (72/3%=24 years) you end up with a much longer time to double your money = 24 years. In this case, it would take you 192 years to get to the same $1.28m in the example above. LESSON: You need to take risks, and get a return, to really grow your wealth. A savings account won't cut it.
- Risk - On that same note, a higher return isn't always a great option. Higher returns usually mean higher risk and if your investment goes bankrupt this upside-down triangle will go...poof. Be wary of investments promising returns of 10%+. It's not impossible, but just perk your ears up.
- Save MORE - The more you start with, the earlier you start, and the more you add to your balance in the beginning, the way more you'll end up with in the end. I picture each dollar we save and invest like upside-down triangles growing and expanding over time, and the longer we can keep each of those dollars invested, the wider our triangle will be at the end.
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