In personal finance, the rule that estimates an investment’s doubling time by dividing 72 by its annual percentage return is the Rule of 72.
For example, at an assumed annual return of 8%, dividing 72 by 8 gives an estimate of 9 years to double. The rule is a mental-math approximation for compound growth, not a guarantee or a precise financial forecast.
The estimate works best for moderate fixed rates and becomes less accurate at very high or very low rates. Actual results depend on compounding frequency, fees, taxes, deposits, withdrawals, and changing returns. Inflation also reduces the purchasing power of a future balance.
The same shortcut can approximate how quickly prices or debt grow at a constant rate. It should be used for rough comparisons, while detailed planning requires calculations based on the actual assumptions and cash flows.