L1 · Starter: How Markets Work / Money Basics
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The Rule of 72: Doubling Your Money in Your Head
How long does money take to double? You can work it out in your head in two seconds.
Divide 72 by the yearly growth. That is roughly how many years your money takes to double.
The story
A family wedding in Bengaluru. Arjun's uncle is boasting near the food counter.
Arjun: Meera, my uncle says his 8% plan doubles his money in 9 years. Is he right?
Meera: Check it yourself. What's 72 divided by 8?
Arjun: 9. Wait… that's it?
Meera: That's the Rule of 72. Divide 72 by the yearly growth. You get roughly the years to double.
Arjun: Why 72 and not 100?
Meera: Because growth compounds. 72 is a handy number that works well for normal rates, like 6% to 12%.
Arjun: So at 12%, money doubles in 6 years?
Meera: About that. And here's a scary one: prices rising 6% a year double in about 12 years.
Arjun: So this biryani could cost double in 12 years?
Meera: If prices keep rising at 6%, yes. Go try it in the lab, uncle-checker.
What you just saw
The dashed line is double your money. The gold dot shows when you reach it.
Higher growth moves the dot to the left: you double sooner.
The shortcut and the exact answer are always close. That is why people love it.
72 ÷ growth % = years to double.
Practise it in the Compounding & money.