Definition
The Rule of 72 is a quick approximation for how long it takes a quantity growing at a steady compound rate to double. You divide 72 by the growth rate expressed as a percentage, and the result is the approximate number of periods to double.
For example, a savings account growing at 6 percent a year doubles in roughly 72 divided by 6, or about 12 years. It works for any compounding quantity: investments, economic output, populations, or prices.
Why it matters
How it works
True doubling time comes from the logarithm of 2 divided by the logarithm of one plus the growth rate. The number 72 is a convenient stand-in because it divides cleanly by many integers and tracks the exact answer well in the common range of rates.
The same logic applies to decline: at a steady inflation rate, dividing 72 by that rate estimates how long until purchasing power is cut in half. The rule's power is conceptual, showing that even modest sustained growth compounds dramatically.