January 23, 2026
By Ray Henke
The growth of an investment over time is known as compounding interest, and tis the driver of wealth creation over long periods of time.
Compounding Interest
The gain an investment increases over a set period of time, like one year, is know as its yield. The magic of investing is when the first year's gain is the added to the starting point for the second year, resulting in a higher yield the second year over the first year. The pattern of growing gains really takes off when it is performed over decades, resulting in dramatically larger yields versus the initial investment.
Rule of 72
When trying to see how long it will take for an investment to double in value, there is a little math quirk you can use that is summarized as the "Rule of 72" The basic idea is that knowing either the interest rate or the desired years, will yield the other value when 72 is divided by the known value. For instance, earning a 12% return mean 72/12 => 6 years for the investment to double. Vice versa, what rate would you need to double your money in 10 years? 72/10 => 7.2%
Who created the rule
Unlike a rule created by the IRS, this is not a hard and fast rule, rather it is just short-hand approximation.
Why 72?
That is just how the math works out. If 70, 82, or any other number did the trick, then that would be the rule name instead.
Rule of 105
There is also a "Rule of 105" that covers how long it take something to double, but nobody really ever uses that number.
Conclusion
Rule of 72 is a pretty simple math trick that simplifies some of the math involved with investing.