Money Doubling Time (Rule of 72)

Doubling time with compound interest

Want to know how long it takes capital to double at a fixed compound rate? The usual shortcut is the Rule of 72: t ≈ 72 / r%. At 8% per year, money doubles in roughly 9 years. At 12%, it's 6 years. The exact formula, t = ln 2 / ln(1 + r), gives 9.006 and 6.116 years for those two rates. The approximation stays within 1% of the truth for rates between 5% and 15%, which covers most retail investments.

For very low rates (under 4%) the Rule of 70 fits better. Above 20% neither shortcut holds up, so reach for the logarithmic formula directly. You can also flip the question around with the exact equation: at what rate does capital double in N years? Solve r = 2^(1/N) − 1.

Practical applications

In long-term planning (retirement, a child's college fund) doubling time tells you how many times the principal will multiply over the horizon. It also makes comparisons quick. A 6% bond doubles in 12 years, a 10% one in 7.2 years, so the second runs through 1.67 doubling cycles in the time the first needs for one. And it works as a gut-check against shady offers that promise to "double in 30 days": that's about 2.4% a month or 33% a year, only believable in fixed income carrying extreme risk.

FAQ

Does the rule work for monthly rates? Yes, provided the rate and the answer use the same time unit. 1% per month doubles in roughly 72 months (6 years), off by about half a month.

Does inflation affect doubling time? The rule gives nominal time. For the real doubling time, the one measured in purchasing power, plug in the real rate (1 + nominal) / (1 + inflation) − 1.

And triple-your-money time? Switch to the Rule of 114: t ≈ 114 / r%. To grow capital tenfold, use 231 / r%.