Understanding the Rule of 72

By
John Dunlevy
Money Manager, Investment Portfolio Strategist

Investing

The Rule of 72 is most often used to estimate how long given a fixed rate of return it would take for an investment or a portfolio to double in value. This same formula can be used to estimate how many years it would take for a portfolio at a fixed inflation rate to lose 50% of its purchasing power.

Rate of Return (r) # of Years to Double (t)
2% 36.0
3% 24.0
4% 18.0
5% 14.4
6% 12.0
7% 10.3
8% 9.0
9% 8.0
10% 7.2
12% 6.0

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