Rule of 70 vs Rule of 72: When to Use Each

The two rules

The Rule of 70 says doubling time is roughly 70 divided by the rate as a percentage. The Rule of 72 swaps 70 for 72. The reason 72 won the popularity contest in finance is that it has many small divisors: 2, 3, 4, 6, 8, 9, 12, which means the mental division stays clean for common interest rates.

Accuracy at typical rates

For rates between 1 and 4 percent, the Rule of 70 is usually closer to the exact answer because ln(2) is about 0.693, and 0.693 times 100 equals 69.3. The closer you are to that point, the better the Rule of 70 does.

For rates around 6 to 10 percent, the Rule of 72 nudges ahead because continuous compounding effects shift the optimal divisor slightly higher. Either way, the difference between the two is small unless your rate is large.

Which to use when

If you are doing back-of-the-envelope estimation, use the divisor that produces the cleanest mental division. If you are presenting a number that someone will rely on, run it through the exact formula. See The Doubling Time Formula for that math, and try the calculator to compare all three answers in one place. For a broader view of where doubling time lives, see Exponential Growth and Doubling Time.