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Finance Glossary

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Rule Of 72


A nifty little equation that lets you use the number 72 to figure out how long it will take for you to double the value of your investment. Just divide 72 by the annual rate of return on an investment to find out how many years will take for it be worth twice as much.


You buy $1,000 worth of a stock (50 shares at $20 a share), which compounds at 8% per year. The Rule of 72 tells you how many years it'll take to double the principal compounded value of that stock—to get the magic number, you take that 8 and divide it into 72. In this case, at an 8% compound rate, it'll take you 9 years to double your money.