✨ Featured Lessons · Lesson 32 of 54 · 60 sec

The Rule of 72

⏳ Here's a magic trick you can do in your head: tell anyone exactly how many years it takes their money to double. It's one division problem, it's weirdly accurate, and it instantly tells you if an investment is even worth it.

💡 Key idea

72 ÷ your return % = years to double your money. Fast mental math for whether an investment is actually worth it.

🧠 Why it matters

The RULE OF 72 is a shortcut: divide 72 by your annual return rate, and you get roughly how many years it takes your money to DOUBLE. Earning 8% a year? 72 ÷ 8 = about 9 years to double. It's not perfectly exact, but it's close enough to be genuinely useful — and it works in reverse for inflation eating your cash, too.

🌍 In the real world

💡 At 8% (roughly the stock market's long-term average), money doubles about every 9 years: $10,000 → $20k in 9 years → $40k in 18 → $80k in 27. At a 1% savings account? 72 years just to double. Same money, completely different life.

📌 Takeaways

72 ÷ return rate = years to double
Higher returns double your money far faster
Works for inflation too — it shows how fast cash halves

📈Try it: Compound interest calculator →

📖 Terms in this lesson

Compound interest: Interest that earns interest of its own, so money grows faster and faster the longer it's left alone.

✅ Test yourself

An investment returns 6% a year. Roughly how long to double your money?

6 years
12 years
24 years
50 years

Answer: B · 12 years

72 ÷ 6 = 12 years. The Rule of 72 turns this into a one-second mental calculation.

Why does a 1% savings account barely grow your money?

Banks are generous
72 ÷ 1 = 72 years just to double it
Banks only pay interest once a decade
Because of taxes

Answer: B · 72 ÷ 1 = 72 years just to double it

At 1%, doubling takes ~72 years — slower than inflation shrinks it, so you actually lose ground.

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