🔍 What Is the Rule of 72?
I was reading a book about “Conquer your Financial Future” and it talked about “Rule of 72”. It was the first time I get to know the term and it sounds interesting. So I dig further and did some research to find out what is compound interest or Rule of 72.
In simple words, the Rule of 72 helps estimate how long it takes for your investment to double.
📌 Here’s the formula:
72 ÷ Interest Rate = Years to Double
For example:
If you’re earning 6% interest, then:
72 ÷ 6 = 12 years
So, your money will double in about 12 years.
If you’re in your 40s or 50s, every dollar you invest or save now still has time to grow—if you understand how compounding works.
This rule helps you:
- See if your current savings strategy is working hard enough
- Decide whether to shift from savings accounts to higher-yield investments
- Estimate retirement or emergency fund growth without a spreadsheet
💡 Real-Life Example: Let’s Say…
You have $50,000 in a retirement account earning 8% annually.
Using the Rule of 72:
72 ÷ 8 = 9 years
So your $50,000 will become $100,000 in 9 years.
In another 9 years? It could be $200,000 — without any new deposits.
Now imagine you started 5 years earlier. That’s the power of compounding.
⚠️ But What If You’re Only Earning 1%?
Let’s try a savings account earning 1% interest:
72 ÷ 1 = 72 years 😬
That’s why simply saving money isn’t enough anymore. You need to make your money work for you.
📊 Try It Yourself: Use Our Free Retirement Calculator
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🧭 What Should You Do Next?
If you’re serious about growing your money, follow these 3 steps:
- Use the Rule of 72 to check if your current savings rate is fast enough
- Adjust your savings or investments to aim for a higher return (with acceptable risk)
- Use planning tools (like our calculator and free budget sheets) to map your financial future
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This sheet works perfectly with our calculator and helps you plan ahead confidently.
📣 Final Thoughts
The Rule of 72 is a timeless trick that can change how you think about money.
When you understand how fast your money grows, you make smarter choices—and reach your goals faster.
Whether you’re saving for retirement, college, or just peace of mind, this one rule puts you in the driver’s seat.
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This is general information only and not financial advice. For personal guidance, please talk to a licensed professional.
