Rule of 72

The Rule of 72 is a practical shortcut for estimating how many years it takes for an investment to double at a fixed annual rate of return. You divide 72 by the expected annual percentage return, and the result approximates the doubling time in years. It captures the exponential effect of compound interest without a calculator and is most accurate for rates between about 6% and 10%. The same method can estimate how long it takes inflation to halve the purchasing power of money.