How long does it take to double your money? The rule of 72 is a simple yet powerful math formula that is very useful in determining how fast your money will grow. It gives you an estimate of the number of years required to double your money at a given annual rate of return. The rule states that you divide the annual rate of return (expressed as a percentage) into 72: Years required to double investment = 72 ÷ compound annual interest rate.
For example, $100 invested at 10% takes 7.2 years (72 divided by 10) to turn into $200.
The rule of 72 is really simple math, but it can be enormously helpful in putting your savings and investing goals into perspective. If you invested $10,000 at 7%, it takes about 10 years to turn into $20,000. That same $10,000 placed in an account that yields 1% a year would take you 72 years to double – That’s a 60-year difference in time to go from $10,000 to $20,000 based on the difference in the two rates of return.
