In investing, the Rule of 72 estimates an investment’s doubling time by dividing 72 by its annual return percentage.
For example, an investment growing at 8% per year would take approximately nine years to double, because 72 divided by 8 equals 9. The shortcut assumes a steady annual growth rate and reinvestment of returns.
The rule is an approximation based on compound growth, not a guarantee. Its estimates are generally more useful for ordinary rates of return than for extremely high or very low rates. Actual investment results can vary because prices, interest rates, fees, taxes, and reinvested income may change.
The Rule of 72 is related to the more mathematically precise natural-logarithm calculation for doubling time. It is also sometimes adapted for estimating how long inflation may take to halve money’s purchasing power, but that use is separate from estimating investment growth.