Rule of 72
A mental shortcut for how long money takes to double: divide 72 by the yearly return. How accurate it is, and why it works for inflation too.
Key idea
Divide 72 by a yearly growth rate in percent and you get roughly the number of years it takes to double. At 6% a year, money doubles in about 12 years; at 9%, in about 8. It turns compound interest into something you can do in your head.
What it is
The rule of 72 is a shortcut for how long money takes to double at a steady yearly return, with compound interest: divide 72 by the return in percent. At 6% a year, 72 ÷ 6 = 12, so money doubles in about 12 years. In fact, CHF 10,000 at 6% is worth 20,121.96 after 12 years, close enough for a decision made in your head.
Rule vs exact
The exact answer needs logarithms: the natural log of 2 divided by the natural log of 1 plus the return. Here's how the shortcut compares, in years:
| Yearly Return | Rule of 72 | Exact | Difference |
|---|---|---|---|
| 2% | 36.0 | 35.0 | +1.0 |
| 4% | 18.0 | 17.7 | +0.3 |
| 6% | 12.0 | 11.9 | +0.1 |
| 8% | 9.0 | 9.0 | 0.0 |
| 10% | 7.2 | 7.3 | −0.1 |
Between 4% and 10%, the rule lands within half a year of the exact answer, and at 8% it's off by less than a week. Outside that range it drifts, but it still gets you the right order of magnitude.
Swiss figures show how far apart doubling times can be. The savings rates Swiss banks published averaged 0.07% in August 2026, according to the Swiss National Bank: at that rate, money would take about a thousand years to double. Swiss shares returned 6.8% a year from 1900 to 2025, compounded, according to Pictet's study of Swiss returns: there the rule says 10.6 years, and the exact answer is 10.5. Why shares paid more, and what that cost in bad years, is the subject of risk and return.
What it's good for
A rough rule with three good uses:
Quick estimate
Compare two returns in seconds: at 4%, money doubles in about 18 years, at 8% in about 9.
Works for inflation too
Divide 72 by the inflation rate to see how fast prices double. At 2%, the rule says 36 years. The exact answer is 35.0.
Shows the power of compounding
At 6%, CHF 10,000 grows to 20,121.96 in 12 years, then to 40,489.35 by year 24 and 81,472.52 by year 36.
The honest caveat
The rule of 72 is an approximation. It's most accurate around 8% and drifts further off the further you go from it: at 2% it overstates the time by a full year, and at 20% it says 3.6 years where the exact answer is 3.8.
It also assumes the same return every year. Real investments don't grow in a straight line, and fees, taxes and inflation all slow the doubling down. Use it to get a feel for the numbers, not to plan to the year.
Swiss note
Feed the rule the return you actually keep, after taxes, fees and inflation: your real return. Under the federal income tax law (DBG), interest and dividends count as taxable income every year, while capital gains on privately held securities are generally tax-free. Two investments with the same return can therefore double at different speeds after tax, depending on how much of the return comes as income. Say a 4% return comes as interest and your marginal tax rate is 25%: 3% is left, and the money doubles in about 24 years instead of 18. Divide 72 by the rate your own savings account pays.
Key takeaways
- —Years to double ≈ 72 ÷ the yearly return in percent.
- —Between 4% and 10%, the rule lands within half a year of the exact answer.
- —It works for anything that compounds, inflation included: at 2%, the rule says prices double in 36 years.
- —Use the return you actually keep, after fees, taxes and inflation.