The Rule of 72 is a mental math shortcut: divide 72 by an annual return rate to estimate how many years your money takes to double. 8% return = 9 years to double. 12% = 6 years. Works because of compound interest mathematics. Accurate within 1-2 years for rates between 6-15%. Use it backwards too: divide 72 by years to see what rate doubles your money. Money doubling in 10 years = 7.2% required return. Practical applications: estimating retirement growth, comparing investment alternatives, understanding inflation's wealth erosion (3% inflation halves purchasing power in 24 years). The Rule of 114 estimates tripling time; Rule of 144 quadrupling time.
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Rule of 72
August 22, 2026 · Aditya Gupta
Investing
Related terms
401(k)
A 401(k) is an employer-sponsored retirement plan where employees contribute pre-tax salary that grows tax-deferred until withdrawal. The…
Active Management
Active management is the attempt to outperform a benchmark through stock selection, sector rotation, market timing, or any…
Alpha
Alpha is excess return relative to a benchmark, adjusted for risk (beta). Positive alpha means an investment outperformed…
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Asset allocation is the percentage split of your portfolio across asset classes — typically stocks, bonds, and cash,…
Backdoor Roth
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