In personal finance, what does the Rule of 72 estimate?

In personal finance, the Rule of 72 estimates the number of years needed for money to double at a fixed annual return.

To use it, divide 72 by the annual interest or growth rate. At 8%, the estimate is about 9 years; at 6%, it is about 12 years. The rule is an approximation based on compound growth, not a guarantee of investment performance.

It works best for moderate rates and steady compounding. Inflation, taxes, fees, deposits, withdrawals, and changing market returns can make real-world results differ substantially. For instance, a nominal investment return does not show how much purchasing power remains after inflation.

The rule can also approximate how quickly prices or debt balances double when they grow at a constant rate. More precise calculations use logarithms, but the Rule of 72 is popular because it can be done mentally.