Money Basics · Retirement (yes, already)

The Rule of 72

The Rule of 72 is the fastest mental math trick in personal finance. Divide 72 by the annual return rate to get the approximate number of years it takes to double your money.

The rule

Years to double = 72 ÷ Annual return rate (%)

Examples:

72 ÷ 2.5% (savings account)~29 years to double

72 ÷ 7% (FD)~10.3 years to double

72 ÷ 7.1% (PPF)~10 years to double

72 ÷ 12% (equity mutual funds)6 years to double

> At 12%, your money doubles every 6 years. In 30 years, it doubles 5 times: ₹1L → ₹2L → ₹4L → ₹8L → ₹16L → ₹32L.

Why this matters

The difference between 7% and 12% seems small. Over 30 years:

• ₹10 lakh at 7%: ~₹76 lakh
• ₹10 lakh at 12%: ~₹3 crore

The extra 5% return doesn't double your final corpus. It quadruples it. This is why the return rate matters more than anything else in long-term investing.

Inflation flip

The Rule of 72 works for inflation too. At 6% inflation, prices double every 12 years. Which means your savings must grow faster than 6% just to maintain purchasing power.

> 72 ÷ 6% inflation = 12 years for prices to double. Money in a savings account at 2.5% would halve in purchasing power in about 20 years.

When to use this rule

Any time you need a quick comparison between investment options, a gut check on whether an FD is worth it, or a reality check on inflation eroding your fixed-income returns. It's accurate enough for decision-making without a calculator.

Takeaway. Rule of 72: divide 72 by return rate to get years to double. At 12%, money doubles in 6 years. At 6%, prices double in 12 years. Return rate matters enormously over decades.