Doubling Time Explained: The Rule of 72 and Real Returns
Divide 72 by the annual return you expect, and the answer is roughly the number of years it takes money to double.
By Michael Hewitt, Founder & Editor-in-Chief. Updated October 27, 2026.
The Rule of 72: A Fast Way to Estimate Doubling Time
Divide 72 by the annual return you expect, and the answer is roughly the number of years it takes money to double. The shortcut is an estimate, not a promise. It is most useful for moderate, steady returns and loses accuracy when the return is very high or very low.
The rule works because of compounding: each period's growth earns growth of its own, so the balance rises faster as it gets bigger.
The Exact Formula and Why Compounding Drives It
The exact time to double is the natural logarithm of 2 divided by the natural logarithm of one plus the return: years = ln(2) / ln(1 + r). Since ln(2) is about 0.693, the formula gives close to the same answer as the Rule of 72 for moderate returns.
Reinvested earnings are what make the clock run.
What Actually Sets the Clock
The return controls doubling time, and the return that matters is the one you keep after costs. Take it from the account's own terms, such as a published rate, a fund's stated expense ratio or a documented historical record, not from a headline figure.
Savings and money market rates change with the rate environment, so the doubling time on cash can shift over time. Compare the options in our guide to high-yield savings, money market accounts and CDs.
Inflation, Taxes, and Fees: Why Money Doubles Slower in Practice
Inflation reduces what money can buy. To estimate how long your purchasing power takes to double, use the return after inflation rather than the nominal return. The result is usually longer than the headline figure suggests.
In a taxable account, tax on interest and gains reduces the return every year, which stretches the timeline. Tax-advantaged retirement accounts avoid that annual drag until money is withdrawn.
Fees work the same way. An annual fee comes straight out of the return, and because it repeats every year, it can add years to the doubling time. Our guide to index funds, ETFs and mutual funds covers the costs that matter most.
Using Doubling Time for Retirement Planning
Doubling time is most useful as a way to count how many doublings fit before retirement. Every doubling roughly doubles what is already saved, so starting early matters more than most savers expect, and contributions made while the balance is still small have the longest time to compound.
For the full retirement picture, see our retirement investing guide.
Claims That Promise Fast, Certain Growth
Be wary of any offer that promises to double your money in a set time, or that guarantees a high return. Legitimate investments carry risk, and none can promise a fixed doubling time. A promise of fast, certain doubling is a common warning sign of a scam. Check the registration and disclosures of whoever is making the offer before any money moves.
Frequently Asked Questions About Doubling Time
Is the Rule of 72 exact? No. It is an approximation that is most accurate for moderate returns. The exact formula uses the natural logarithm.
Does inflation change the answer? Yes. Subtract expected inflation from the return to estimate how long your purchasing power takes to double.
Do fees matter that much? They do. A fee permanently reduces the return, and because it repeats every year, its effect on doubling time adds up.
Net Return and Time Set the Clock
Doubling time depends on the return you keep after taxes, fees and inflation. Use the Rule of 72 for a quick estimate, the exact formula when you need precision, and subtract the costs before you trust the answer.