THE GLOSSARY · SAVING
Rule of 72
Divide 72 by your rate: you get the number of years to double. A division you can do in your head, and it works on your debt as well as on your savings.
You want to know how long a sum takes to double at a given rate. The exact formula needs a logarithm. The rule of 72 needs a division: 72 ÷ rate = number of years.
| Rate | Rule of 72 | Exact calculation |
|---|---|---|
| 3% | 24.0 years | 23.4 years |
| 6% | 12.0 years | 11.9 years |
| 12% | 6.0 years | 6.1 years |
| 19.99% | 3.6 years | 3.8 years |
It is most accurate between 4 and 12%, and drifts at the extremes — always by less than three months over twelve years. To decide whether an order of magnitude holds, that is plenty.
What it makes visible in a second: at 6%, your money doubles every twelve years. Investing at 25 rather than 37 does not give you "a bit more" — it gives you double, for the same contribution.
A third reading, less known: applied to inflation, it says how long your prices take to double. At 3%, twenty-four years. It is also why a cushion left in an account at 0.05% does not merely earn nothing — it loses, slowly, and the rule says how fast.
In Yoseri, the Savings and goals page does this calculation with your real rate, without rounding, and writes the assumption beside the result.
Your money, with no made-up numbers.
Accounts, budget, savings, debt and investments in one statement. Free with manual entry.