Level 0 ETF basics · Part 7/14

The Rule of 72: estimating doubling time

The Rule of 72 is an approximation: 72 divided by the annual return in percent gives roughly the years until a sum doubles.

Bar pairs for returns of 2 to 12 percent: doubling time by the rule of 72 and calculated exactly
Years to double at 2, 4, 6, 8, 10 and 12 % return: gray by the rule of 72 (72 ÷ return), green calculated exactly. Between roughly 6 and 10 %, the rule is almost exact; at 2 % it overstates the time by nearly a year.
  • 6 % → 72 / 6 = 12 years
  • 8 % → 72 / 8 = 9 years
  • 4 % → 72 / 4 = 18 years

The rule assumes a constant return, which markets never deliver. It does show how strongly a few percentage points of return or cost, and the length of the holding period, change the outcome over decades.

The savings-plan calculator gives the exact figure; the fee article shows how ongoing costs stretch the doubling time.

Information only, not investment advice.