The Rule of 72: Calculate How Long It Takes for Your Money to Double

The Most Useful Formula in Personal Finance

The Rule of 72 is elegant in its simplicity: divide 72 by the annual rate of return to get the number of years it takes for your capital to double.

Concrete Examples

• Livret A at 3%: 72 / 3 = 24 years to double your money
• Assurance-vie fonds euros at 3.5%: 72 / 3.5 = 20.5 years
• PEA invested in stocks at 7%: 72 / 7 = 10.3 years
• Dynamic portfolio at 10%: 72 / 10 = 7.2 years

Why Compound Interest Is So Powerful

Albert Einstein reportedly called compound interest the "8th wonder of the world." The reason: your gains themselves generate gains. It's the snowball effect.

A Telling Example

10,000 euros invested at 7% per year:

• After 10 years: 19,672 euros
• After 20 years: 38,697 euros
• After 30 years: 76,123 euros

The initial capital was multiplied by 7.6 in 30 years, without adding a single additional euro.

The Impact of Time: Starting Early

The difference between starting to invest at 25 and at 35 is colossal. 100 euros per month at 7% return:

• From 25 to 65 years old (40 years): 264,012 euros
• From 35 to 65 years old (30 years): 122,709 euros

10 years delay = 141,303 euros in lost earnings. Time is your best ally.

Practical Application

Use this rule to quickly evaluate any investment. If a salesperson promises you a doubling in 5 years, this implies a return of 72/5 = 14.4% per year. Possible, but risky.