COMPOUNDING
How long will it take my money to double?
There is a one-line calculation that answers this, and understanding it changes how the rest of the decisions feel.
THE SHORT ANSWER
Divide 72 by the annual return. At 7% money doubles in about ten years, at 12% in about six, and at 3% in roughly twenty-four. The same rule works against you: at 6% inflation, prices double in twelve years, which is why a savings account paying 3% is a slow loss.
The rule of 72
Divide 72 by the rate of return and you get the approximate number of years to double. It is arithmetic rather than a formula to memorise, and it makes the difference between returns intuitive in a way that percentages never do.
- 3% in a savings account: about 24 years to double.
- 7% in a fixed deposit: about 10 years.
- 12% in a diversified equity fund over long periods: about 6 years.
Over thirty years, that is roughly one doubling, three doublings, and five doublings. One lakh becomes about two lakh, eight lakh, or thirty-two lakh. The gap between those outcomes is not a few percentage points. It is the whole result.
Where the growth actually happens
₹10,000 a month at 12% grows to about ₹23 lakh over ten years, ₹99 lakh over twenty, and ₹3.5 crore over thirty. The contributions across those periods are ₹12 lakh, ₹24 lakh and ₹36 lakh.
Read the last decade separately. Between year twenty and year thirty you contribute ₹12 lakh and the balance grows by about ₹2.5 crore. Almost all of the outcome is produced in the final stretch, which is precisely the part that people who started late never reach.
This is why five years of delay costs so much more than five years of a smaller contribution. You do not lose five years from the beginning, where the amounts are small. You lose five years from the end, where they are enormous.
The rule running backwards
Apply the same calculation to inflation. At 6%, prices double in about twelve years. A lifestyle costing ₹50,000 a month today costs ₹1,00,000 in twelve years and ₹2,00,000 in twenty-four, with nothing having improved.
That is the real case against holding long-term money in a savings account at 3%. The money doubles in twenty-four years while prices double in twelve. You end up with twice as many rupees buying half as much.
What to do with this
Not much, which is the point. The mechanism needs a rate above inflation, a long period, and the discipline not to interrupt it. Interrupting is the common failure. Women's mutual fund assets held for more than five years rose from 5% in March 2021 to 24% in March 2026, which is the behaviour the arithmetic rewards.
ONE MOVE THIS WEEK
Apply the rule of 72 to wherever your largest balance currently sits. If the answer is over twenty years, you have found this week's problem.
