The Rule of 72: How Many Years Until Your Money Doubles?

"Saving 100,000 KRW a month, when am I ever going to get rich?" You've probably said something like this at least once. But once you understand compound interest, the same money starts to look completely different depending on time. Compound interest has a structure where 'interest is added on top of the interest already earned on the principal,' so at first it's frustratingly slow, and then at some point the curve shoots up steeply. In this article, we'll work through the principle of compounding and the 'Rule of 72'—which lets you find how long it takes for your assets to double without a calculator—using concrete numbers. (* This article is for information and reference only and is not a recommendation to invest in any specific product.)

Simple vs. Compound Interest: How Big Is the Gap After 30 Years?

Let's say you put 10 million KRW to work at a 7% annual return. With simple interest, 7%—that is, 700,000 KRW—is added to the principal alone each year. Over 30 years, that's 21 million KRW in interest, for a total of 31 million KRW. With compound interest, on the other hand, interest is added on the interest too. Under the same conditions, 10 million KRW × (1.07)³⁰ ≈ 76.12 million KRW. That's nearly 2.5 times more than simple interest. The key point is that this difference was created not by the 'principal' but by 'time.'

The Rule of 72: Finding the Doubling Time in Your Head

Calculating exactly how long it takes for principal to double under compounding requires logarithms, but in practice a simple approximation—'72 ÷ annual rate (%)'—is good enough. This is the Rule of 72. For example, at a 6% annual return, 72 ÷ 6 = 12 years to double. At 8%, that's 72 ÷ 8 = 9 years; at 4%, 72 ÷ 4 = 18 years. You can also use it the other way around. If you want to 'double your money within 10 years,' then 72 ÷ 10 = 7.2%—meaning you'd need a 7.2% annual return.

• 2% per year (typical bank deposit level): 72 ÷ 2 = 36 years to double
• 4% per year: 72 ÷ 4 = 18 years
• 6% per year: 72 ÷ 6 = 12 years
• 9% per year: 72 ÷ 9 = 8 years
• 12% per year: 72 ÷ 12 = 6 years

Reading the Inflation Rate with the Rule of 72, Too

The Rule of 72 isn't only for growing your assets. It also tells you how long it takes for the value of money to 'get cut in half.' If prices rise by 3% every year, then after 72 ÷ 3 = 24 years, the amount of goods you can buy with the same 10,000 KRW is reduced by half. That's why simply leaving cash in a bank account is itself an invisible loss. If your deposit rate is below the inflation rate, then even though you receive nominal interest, your 'real purchasing power' is being eroded.

So Where Should You Put Money to Keep Compounding Rolling?

The power of compounding grows even larger when it meets 'tax exemptions and tax credits.' When the tax taken every year (15.4% tax on interest and dividend income) is reduced, the principal reinvested grows by that much, so the snowball builds faster. Here are the representative systems in Korea that ordinary people can put to good use:

1. Pension Savings + IRP: Combined, you get a tax credit on up to 9 million KRW per year. A 16.5% credit rate applies if your total salary is 55 million KRW or less, and 13.2% above that → contribute 9 million KRW and you get up to 1.485 million KRW back through year-end tax settlement (on the premise of receiving it as a retirement pension; there are penalties for early termination).
2. ISA (Individual Savings Account): The general type is tax-exempt on net gains up to 2 million KRW (4 million KRW for the lower-income/farming-and-fishing type), with the excess taxed separately at 9.9%. There is a mandatory 3-year holding period.
3. Deposits and installment savings: At a first-tier bank, deposit protection covers up to 50 million KRW in principal plus interest per person per financial institution (if you remember the pre-2025 standard, recheck the raised limit). The foundation of safe assets.
4. Housing subscription account: The Housing Subscription Comprehensive Savings account qualifies for an income deduction on contributions when you meet requirements such as being a homeless head of household with a total salary of 70 million KRW or less, and it's the starting point for your eligibility to subscribe for a home of your own.

Diversification: Don't Put Everything in One Basket

Compounding shows its power when a 'steady rate of return' is the premise. If you go all-in on one stock or one asset, a single big loss can topple all the compounding you've built up. For example, if you take a –50% hit, you need +100% just to get back to even. Because losses demand a larger return to recover, diversification that lowers volatility (across asset classes, regions, and timing) can actually be more advantageous for long-term compounding.

In compounding, the most expensive cost is neither fees nor taxes—it's 'the time you started late.'

To sum up, the Rule of 72 is a compass that, with no complex math, shows you both 'how long it takes for your money to double' and 'how long it takes for inflation to eat away at it.' What matters is not chasing high returns, but maintaining a reasonable expected return over a long time. Stop the money that leaks out by using tax credits and tax-exemption systems, avoid big losses through diversification, and make time your ally. The small step you start today will shine, 30 years from now, on the steepest stretch of the curve. (* Returns and tax treatment are assumptions and examples; always check the latest terms and tax laws before actually signing up for any product.)