The rule of 72

Doubling time ≈ 72 ÷ growth rate.

Compounding is the most important idea in business, and also the one people have the worst intuition for. The rule of 72 gives you that intuition in a second, with no calculator.

The move

Time to double ≈ 72 ÷ growth rate per period. Growing 8% a month doubles in about 9 months. It works backwards too: doubling every 6 months means about 12% per month.

Worked example

Newsletter grows 6% a month. How long until it doubles?

  1. 72 ÷ 6 = 12 months
  • 4× = two doublings, 8× = three doublings. So 4× takes twice as long as 2×.
  • It works for decay too: losing 6% a month halves you in about 12 months.
  • Why 72? It’s close to the real answer (69.3) and divides nicely by 2, 3, 4, 6, 8, 9 and 12.