Rule of 72
Version 1.0.0 · Updated 2026-07-30
CORE DEFINITION
A mental shortcut for quickly calculating the time required for an asset to double in value. Doubling time in years ≈ 72 / annual rate of return. For example, with a 6% return, it takes 12 years to double; with a 12% return, it takes only 6 years.
SCAFFOLDING EFFECT
Reduce cognitive load
Intuitive quantification: gives you a tangible sense of time for a 'growth rate'. Use it to quickly see through scams (e.g., 'If you want to double in 1 year, you're chasing a 72% return, which is more than 3 times Buffett's returns').
Anchor fast decisions
Based on 'compound interest' and 'logarithmic approximation'. Doubling time t≈ln2/r, ln2≈0.693, with 72 chosen for ease of mental calculation; the higher the return, the faster the doubling, and the relationship is nonlinear.
MINIMUM ACTION
In progress 0/1Practice this model in one real situation:
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Source support: Explicit
- en.wikipedia.orghttps://en.wikipedia.org/wiki/Rule_of_72verified
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