What is Rule 72 in savings?

Asked by: Mckenzie Jenkins  |  Last update: December 7, 2025
Score: 4.7/5 (64 votes)

First, the “rule of 72” states that an investment with an average annual return rate of 7.2% is set to double every 10 years. Here's a “rule of 72” example: If 20-year-old Sarah invested $1,000 today and just left it there until she retired at age 70, she could end up with something like $32,000. A 32x increase.

What is the Rule of 72 in simple terms?

Do you know the Rule of 72? It's an easy way to calculate just how long it's going to take for your money to double. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.

Does the Rule of 72 really work?

The rule of 72 is only an approximation that is accurate for a range of interest rate (from 6% to 10%). Outside that range the error will vary from 2.4% to 14.0%.

How can I double $5000 dollars in a year?

10+ Ways to Double $5,000
  1. Start a Side Hustle. Perhaps the most common method of making more money is starting a side hustle. ...
  2. Invest in Stocks and Bonds. ...
  3. Day Trade. ...
  4. Save More Money. ...
  5. Buy and Resell Items on Amazon and eBay. ...
  6. Build an eCommerce Business. ...
  7. Sell Your Stuff. ...
  8. Earn cashback When You Shop.

How long will it take to double your money using the Rule of 72?

The rule is this: 72 divided by the interest rate number equals the number of years for the investment to double in size. For example, if the interest rate is 12%, you would divide 72 by 12 to get 6. This means that the investment will take about 6 years to double with a 12% fixed annual interest rate.

Power of Compounding Using The 8-4-3 Rule (Compound Your Interest)

24 related questions found

How long will it take to increase a $2200 investment to $10,000 if the interest rate is 6.5 percent?

Final answer:

It will take approximately 15.27 years to increase the $2,200 investment to $10,000 at an annual interest rate of 6.5%.

How to double $2000 dollars in 24 hours?

Try Flipping Things

Another way to double your $2,000 in 24 hours is by flipping items. This method involves buying items at a lower price and selling them for a profit. You can start by looking for items that are in high demand or have a high resale value. One popular option is to start a retail arbitrage business.

How to turn $100 dollars into $1,000 in a month?

10 best ways to turn $100 into $1,000
  1. Opening a high-yield savings account. ...
  2. Investing in stocks, bonds, crypto, and real estate. ...
  3. Online selling. ...
  4. Blogging or vlogging. ...
  5. Opening a Roth IRA. ...
  6. Freelancing and other side hustles. ...
  7. Affiliate marketing and promotion. ...
  8. Online teaching.

How can anyone turn $5000 into more than $400,000?

The magic of compound interest

Any saver can turn an initial deposit of $5000 into $416,325 (before fees) over 20 years by earning an annual return of 10 per cent and investing an additional $500 each month into their investment kitty.

What is the 8 4 3 rule?

This rule is based on the principle of compounding interest and suggests that if you invest in a mutual fund with a 12 per cent annual return, your investment will double approximately every 8 years. After the first doubling, it will double again in the next 4 years, and then a final time in the subsequent 3 years.

What is the magic Rule of 72?

What is the Rule of 72? Here's how it works: Divide 72 by your expected annual interest rate (as a percentage, not a decimal). The answer is roughly the number of years it will take for your money to double. For example, if your investment earns 4 percent a year, it would take about 72 / 4 = 18 years to double.

What is a safe investment right now?

Here are the best low-risk investments in 2025:

High-yield savings accounts. Money market funds. Short-term certificates of deposit. Cash management accounts.

How to double your money in 3 years?

To answer the question of how to double my money quickly, simply invest in a portfolio of investment options like ULIPs, mutual funds, stocks, real estate, corporate bonds, Gold ETFs, National Savings Certificate, and tax-free bonds, to name a few.

What is the $1 rule?

Before buying an item, figure out how many times you'll use it. If it breaks down to $1 or less per use, I give myself the green light to buy it.

How to turn $10,000 into $100,000 fast?

Here are the most effective ways to earn money and turn that 10K into 100K before you know it.
  1. Buy an Established Business. ...
  2. Real Estate Investing. ...
  3. Product and Website Buying and Selling. ...
  4. Invest in Index Funds. ...
  5. Invest in Mutual Funds or EFTs. ...
  6. Invest in Dividend Stocks. ...
  7. Peer-to-peer Lending (P2P) ...
  8. Invest in Cryptocurrencies.

How can I double $50,000 dollars?

The classic approach to doubling your money is investing in a diversified portfolio of stocks and bonds, which is likely the best option for most investors. Investing to double your money can be done safely over several years, but there's a greater risk of losing most or all your money when you're impatient.

How to get 20 percent return on investment?

Keep It Simple:- Consider using low-cost index funds or ETFs to build your investment portfolio. These can provide diversification and potentially higher returns over the long term. Understand and Manage Risk:- While aiming for a 20% return, it's important to understand the associated risks.

How to turn 100k into 1 million?

4 Good Investment Choices for Turning $100k into $1 Million
  1. Real Estate. Real estate remains a solid option for those wondering how to invest 100k to make $1 million in 10 years or less. ...
  2. Stock Market. ...
  3. Index Funds or ETFs. ...
  4. Buying Established Businesses/Websites.

How to double my $1,000 dollars?

Here's how to invest $1,000 and start growing your money today.
  1. Buy an S&P 500 index fund. ...
  2. Buy partial shares in 5 stocks. ...
  3. Put it in an IRA. ...
  4. Get a match in your 401(k) ...
  5. Have a robo-advisor invest for you. ...
  6. Pay down your credit card or other loan. ...
  7. Go super safe with a high-yield savings account. ...
  8. Build up a passive business.

How to make $10,000 dollars right now?

14 Ways to quickly rake in $10,000
  1. Sell valuable items you own. ...
  2. Take on freelance work in your area of expertise. ...
  3. Rent out a room or your entire home on Airbnb. ...
  4. Offer consulting services in your professional field. ...
  5. Flip items by buying low and reselling higher. ...
  6. Become a virtual assistant for multiple clients.

How can I double my money asap?

Trading options is one of the fastest ways to double your money — or lose it all. Options can be lucrative but also quite risky. And to double your money with them, you'll need to take some risk. The biggest upsides (and downsides) in options occur when you buy either call options or put options.

What is 1 doubled every day for 30 days?

If you start with 1 dollar and double it every day for 30 days, you would have approximately $1,073,741,824. This shows the concept of exponential growth. Like the penny example, this is not typically possible in real-world investing scenarios.

What investment is best for beginners?

Dividend stocks can be a great choice for investors looking for passive income. View our list of high-dividend stocks, and learn how to invest in them. There are a lot of ways to invest money — high-yield savings accounts, CDs, bonds, funds and stocks are all options.