By James Moore
December 4, 2023
Most people know the basics of interest rates and inflation, but compound interest is a totally different story. One of the finance community’s most enduring principles is the Rule of 72. Find out how you can leverage this simple principle to plan how long it’ll take to double your money. Whether you’re squirreling away a nest egg for retirement, saving for a home-improvement project, or looking forward to a summer cruise, the Rule of 72 can help you lay out a roadmap for your financial goals.
Use our Rule of 72 Calculator below to get an idea of how long it will take to double your savings. Try experimenting with different figures to see how much your tax bracket or estimated returns can affect your investment over time.
Before Tax Return on Savings
The annually compounded rate of return on your savings before tax is accounted for. For reference, the average annual compounded rate of return over 10 years prior to Dec. 31, 2022, is 13.6%, according to the Standard & Poor’s 500 (S&P 500), including reinvestment of dividends. Returns reached as high as 61% between June 1982 and June 1983, and as low as -43% from March 2008 to March 2009.
All projections made using this or any financial calculator are hypothetical. We do our best to give our users accurate financial information based on the provided data, but it’s impossible for anyone to predict future market movement. Projections do not constitute financial advice. All investments carry a level of risk, including the risk of loss on investment.
>> Additional resources: Net Worth Calculator
Marginal Tax Bracket
The tax bracket you expect to occupy based on your income. Use the table below to estimate your tax bracket:
What We Recommend Doing Next
You’ve successfully applied the Rule of 72 to your investments, creating an estimate of how long it will take to double your money. If you’re looking to accelerate that pace, you may want to consider some of the following steps:
- Consult a financial adviser: Calculators, graphs, and an understanding of basic financial principles are great first steps, but seeking expert advice is essential before deciding on an investment strategy. Consider finding a financial adviser or speaking to a legal-services provider like Nolo to find the right professional for your needs.
- Consider your strategy: Whether you’re working to double a few hundred dollars or a few hundred thousand, any well-executed financial journey begins with a plan. Budgeting for big expenses such as personal health and home repairs won’t just happen. Take stock of where your money is going and set some well-defined savings goals to keep yourself focused.
- Start early: Interest, inflation, and taxes are just a few of the forces that can stunt your ability to save over time, and one of the best defenses against each of these is leveraging time to create financial momentum. Find out just how much of a difference a few years can make by using our Early Savings Calculator.