The Rule of 72: How Many Years Will It Take for My Money to Double?

You may have wondered, “How am I supposed to get rich by saving 100,000 won a month?” But once you understand compound interest, the same amount of money starts to look very different over time. Compound interest is a structure where “interest earns interest again,” so it feels frustratingly slow at first, then the curve suddenly begins to rise sharply. In this article, we will explain how compound interest works and use concrete numbers to unpack the “Rule of 72,” which lets you estimate how long it takes for your assets to double without a calculator. (※ This article is for informational and reference purposes only and is not a recommendation to invest in any specific product.)

Simple interest vs. compound interest: how big is the gap after 30 years?

Suppose you invest 10 million won at an annual return of 7%. With simple interest, 7% is added only to the principal each year, meaning 700,000 won annually. After 30 years, you earn 21 million won in interest, bringing the total to 31 million won. With compound interest, however, interest also earns interest. Under the same conditions, 10 million won × (1.07)³⁰ ≈ 76.12 million won. That is nearly 2.5 times more than simple interest. The key point is that the difference is created not by the “principal,” but by “time.”

The Rule of 72: estimating the doubling period mentally

Calculating the exact time it takes for principal to double under compound interest requires logarithms, but in practice a simple approximation, “72÷annual interest rate (%),” is usually enough. This is the Rule of 72. For example, if the annual return is 6%, 72÷6 = 12 years, so the money doubles in 12 years. At 8% per year, 72÷8 = 9 years; at 4% per year, 72÷4 = 18 years. You can also use it in reverse. If you want to “double your money within 10 years,” then 72÷10 = 7.2%, meaning you need an annual return of 7.2%.

• At 2% per year (around ordinary deposit levels): 72÷2 = doubles in 36 years
• At 4% per year: 72÷4 = 18 years
• At 6% per year: 72÷6 = 12 years
• At 9% per year: 72÷9 = 8 years
• At 12% per year: 72÷12 = 6 years

Inflation can also be viewed through the Rule of 72

The Rule of 72 is not only used when growing assets. It also tells you how long it takes for the value of money to be “cut in half.” If prices rise by 3% every year, then 72÷3 = 24 years, meaning that after 24 years, the goods you can buy with the same 10,000 won will be reduced by half. That is why simply leaving cash in a bank account is itself an invisible loss. If the deposit interest rate is lower than inflation, you may receive interest in nominal terms, but your “real purchasing power” is being eroded.

So where should you put money for compound interest to work?

The power of compound interest becomes stronger when paired with tax exemption and tax credits. If the taxes taken each year, such as the 15.4% tax on interest and dividend income, are reduced, the amount reinvested as principal increases, helping the snowball grow faster. The following are representative systems that ordinary people in Korea can use effectively.

1. Pension savings + IRP: Together, they provide tax credits on contributions up to 9 million won per year. A 16.5% credit applies for total salary of 55 million won or less, and 13.2% for amounts above that. If you contribute 9 million won, you can receive up to 1.485 million won back through year-end tax settlement (based on receiving a retirement pension; early cancellation has disadvantages).
2. ISA (Individual Savings Account): The general type provides tax exemption on net gains up to 2 million won, or 4 million won for the low-income and farmer/fisher type. Any excess is separately taxed at 9.9%. Mandatory holding period: 3 years.
3. Time deposits and savings accounts: For first-tier financial institutions, the depositor protection limit is 100 million won per person per financial institution, including principal plus interest (if you remember the pre-2025 standard, recheck the increased limit). These are the basics of safe assets.
4. Housing subscription account: A comprehensive housing subscription savings account can qualify for income deduction on contributions if requirements are met, such as being a household head without home ownership and having total salary of 70 million won or less. It is also the starting point for eligibility to apply for home purchase subscription.

Diversification: do not put everything in one basket

Compound interest shows its power when “steady returns” are assumed. If you concentrate everything in one stock or one asset, a single large loss can destroy the compound gains accumulated so far. For example, after a -50% loss, you need +100% just to get back to breakeven. Because losses require even larger gains to recover, diversification that lowers volatility, across asset classes, regions, and timing, can actually be more favorable for long-term compounding.

In short, the Rule of 72 is a compass that shows both “how long it takes for my money to double” and “how long it takes inflation to erode it,” without complicated calculations. What matters is not chasing high returns, but maintaining a reasonable expected return for a long time. Stop money from leaking through tax credits and tax-exempt systems, avoid large losses through diversification, and make time work in your favor. The small step you start today can shine 30 years later, when the curve reaches its steepest section. (※ Returns and tax rules are assumptions and examples. Before subscribing to an actual product, check the latest terms and tax laws whenever possible.)