The Rule of 72: Why You Should Start Saving Today
If you have ever wondered "at what rate will my money double?", the Rule of 72 is the fastest answer — and you don't need a calculator.
What the Rule of 72 is
The formula is simple: 72 ÷ annual interest rate = years for your money to double.
For example, at 10% annually, your money doubles in 72 / 10 = 7.2 years. At 6%, in 12 years. At 3%, in 24 years.
The rule is not exact — it's an approximation of the natural logarithm of 2 (≈ 0.693147) tuned for annual compounding. It works best for rates between 5% and 10%, where the error stays below 1%. For higher or lower rates, more precise versions exist (Rule of 69.3 for continuous compounding, Rule of 78 for extremes). For a quick estimate, 72 is enough.
Applied to real LATAM rates in July 2026
This is where the rule becomes concrete. Below are official benchmark rates from the main Spanish- and Portuguese-speaking markets — all verified against central bank primary sources as of July 2026.
| Country | Product | Reference rate | Years to double |
|---|---|---|---|
| 🇧🇷 Brazil | SELIC target (Copom, 17 Jun 2026) | 14.25% | 5.1 years |
| 🇲🇽 Mexico | CETES 28-day (auction 2 Jul 2026) | 6.30% | 11.4 years |
| 🇲🇽 Mexico | CETES 1-year (auction 2 Jul 2026) | 7.12% | 10.1 years |
| 🇦🇷 Argentina | Retail fixed-term deposit (large banks, Apr 2026) | 16.5% – 21.5% | 3.4 – 4.4 years |
| 🇨🇴 Colombia | CDT 90–360 days (E.A., Jul 2026) | 9% – 14% | 5.1 – 8.0 years |
| 🇨🇱 Chile | UF savings account (MPR Jun 2026) | ~4.5% | ~16 years |
Quick read: in Brazil, Argentina and Colombia, a peso / real / Colombian peso invested today at the official rate doubles in 4 to 8 years. In Mexico, in a decade. In Chile (measured in UF, the inflation-adjusted unit), in 16.
The part almost nobody looks at: inflation
The Rule of 72 measures how much your money grows nominally. What matters for purchasing power is the real rate = nominal rate − inflation.
A quick reference for July 2026 (inflation data changes monthly — check the INEGI for Mexico, the IBGE for Brazil, the INDEC for Argentina, or the DANE for Colombia before making decisions):
- If annual inflation is 4% and your investment yields 7%, your real rate is 7 − 4 = 3%. Your purchasing power doubles in 24 years, not 10.
- If inflation is 8% and your return is 9%, the real rate is 1% — doubling purchasing power would take 72 years.
- In Argentina, with peso fixed-term deposits yielding ~20% but inflation running above 30%, the real rate is negative: your purchasing power falls even as your bank balance rises.
That's why the Rule of 72 alone is not enough. Always ask: how much does it yield, and how much does the cost of living rise? The full calculation is in our compound interest calculator.
Why starting today matters, not tomorrow
Suppose you are 25 and can set aside the equivalent of $200 USD a month. The math assumes two rates (Brazil 14.25% and Mexico CETES 7.12%) and two start ages (25 and 30):
| Start age | Retire age | Rate | Total contributions | Estimated final balance |
|---|---|---|---|---|
| 25 | 65 (40 years) | 14.25% (BR) | $96,000 | ~$1.94 M |
| 30 | 65 (35 years) | 14.25% (BR) | $84,000 | ~$1.07 M |
| 25 | 65 (40 years) | 7.12% (MX) | $96,000 | ~$530,000 |
| 30 | 65 (35 years) | 7.12% (MX) | $84,000 | ~$355,000 |
Those numbers come from monthly compound interest with equal contributions — the full formula is at the end. The takeaway: five years of waiting nearly doubles the final gap, because the early money has more time to compound.
The Rule of 72 is the shortcut version of that idea: if 14.25% doubles in 5.1 years, and you started at 25, you get almost 8 doublings before 65. Starting at 30 leaves you 7. Each doubling you lose doesn't come back.
The Rule of 72 works in reverse too
If someone offers you a loan or you carry a balance at 24% annually (the typical credit card rate in many LATAM countries), your debt doubles in 72 / 24 = 3 years. If you only pay the minimum, in 6 years you owe 4× what you borrowed, and in 9 years 8×. That's why credit cards are traps: compound interest working against you is geometrically more damaging than your salary working for you.
Same rule, opposite direction. The Rule of 72 doesn't distinguish between asset and liability — it applies equally to your savings account and your debt. You pick the direction.
How to use it in daily life
1. Find the real rate of your current product. Fixed-term deposit, money market fund, savings account. Ask your bank or read the contract.
2. Divide 72 by that rate. You now know how long until you double.
3. Subtract expected inflation. If your real rate is below 4% annually, you are barely building real wealth at that speed.
4. If your real rate is negative (as in some Argentine peso fixed-term deposits in certain months), look for inflation-indexed or USD-linked assets instead of letting cash sit.
5. Run the numbers in our compound interest calculator to see the exact impact of your monthly contributions over your chosen horizon.
The rule is a mental shortcut. It doesn't replace the calculation, but it gives you a quick intuition for how fast (or how slow) your money is working.
Sources consulted
- Banco Central do Brasil — Selic and Agência Brasil — Copom reduces Selic to 14.25% (accessed 2 Jul 2026)
- Banco de México — Cetes Directo (auction of 2 Jul 2026)
- Banco Central de la República Argentina — Retail fixed-term comparator (retail rates, Apr 2026)
- Banco de la República (Colombia) — Glosario tasas de captación (Jul 2026)
- Banco Central de Chile — Tasas e indicadores (MPR Jun 2026, UF as of 30 Jun 2026)
- Wikipedia — Rule of 72 and Investopedia — Rule of 72 for the mathematical derivation