# Rule of 72

The Rule of 72 is a quick mental math shortcut: divide 72 by your annual rate of return to estimate how many years it takes for an investment to double in value.

## Why it matters

The Rule of 72 makes abstract compounding tangible. It immediately reveals the real cost of low returns: money in a 1% savings account takes 72 years to double, while a 10% stock market return doubles in just 7.2 years. It also works in reverse — at 3% inflation, the purchasing power of cash is cut in half every 24 years.

Example

At 7% annual return: 72 / 7 = ~10.3 years to double. $50,000 becomes $100,000 in about a decade without adding another dollar.

## How Ray helps

Ray can project doubling times for your various accounts based on their historical returns. Ask to see the Rule of 72 applied to your actual balances.

Terminal

`$ ray "at my current savings rate, how long until my investments double?"`

## Related terms

[Compound Interest](/content/learn/compound-interest/index.html)  
Compound interest is interest earned on both your original principal and on previously accumulated interest.

[APY (Annual Percentage Yield)](/content/learn/apy/index.html)  
APY is the real rate of return on a savings or investment account, accounting for the effect of compounding interest.

[Time Value of Money](/content/learn/time-value-of-money/index.html)  
The time value of money (TVM) is the principle that a dollar today is worth more than a dollar in the future, because today's dollar can be invested to earn returns.

[Inflation](/content/learn/inflation/index.html)  
Inflation is the rate at which the general level of prices for goods and services rises, reducing what each dollar can buy.

[Yield](/content/learn/yield/index.html)  
Yield is the income return on an investment, expressed as a percentage of the investment's cost or current market value.