The Rule of 72 or You’re Not “Baby” Anymore

Andrew D Ellis
3 min readJun 1, 2021

“If you want to beat the S&P 500, start thinking of the index as a filter and not a benchmark. It’s the starting line; not the finish line.” Andrew D. Ellis, Founder, ThinkingLonger, LLC

Hey — you Gen X’ers, Gen Y’s, Gen Z, millennials — it’s time to pull back the curtain and take a hard look at the money that sits in your pockets.

If you took a $100 today and invested it in an S&P 500 Index fund, it would grow on average at a rate of 10% per year (or so says Investopedia and many other sites). My young friend Polly, who always looks on the bright side, says, “So what! Listen, Andrew, after one year, maybe I’d have $110 but maybe next year, the S&P might not go up that much, or it might go down, and I might have even less. Andrew, you’re sweet but really?” Polly probably wanted me to leave her the f**k alone.

I like Polly, and she had been calling me by my first name since she was a teenager. And, I can understand her impatience with me. So, I try to frame the discussion a little differently.

“Polly, would you feel differently if I told you that the $100 in your pocket today is going to be $1,200 in 28 years? That spending that $100 today is costing you $1,200 tomorrow when you might really need it — when you’re older, when you have children, or sick parents, or you need help, when Social Security doesn’t exist, when universal healthcare is still a dream, when you want to stop working, when the world looks different to you than it does today?”

I can tell that Polly is channeling Frederic March, as Col. Harrison Brady in “Inherit the Wind”, and she’s thinking “I don’t think about things that I don’t think about.” But, she knows it’s not a great answer. And she knows that I care about her — since I’ve known Polly since she was a young child who practically lived at our house until she went off to college. And I know that she’s smart having scored 4’s and 5’s on several AP exams, including AB Calculus (in effect loping off almost a year of introductory college classes).

“I tell you what, Polly,” I say, ripping off a piece of paper the size of a business card and scribbling a formula on it.

“Here, put this in your wallet — where you put your twenties,” ignoring the fact that Polly lives on her debit card, but hoping that she had cash occasionally.

I hand Polly the formula for the Rule of 72, a formula that states how long it take money to double at a given rate of return.

Years to double $ = 72 / 10 (S&P 500 annual return) — Spend today or have 12x tomorrow?

The old saying is so true: you can lead a horse to water, but you can’t make it drink. But, I felt like I had done my good deed for the day. I’d given someone 40 years my junior an insight that took me a very long time to learn. Hopefully, she’d continue to be smarter than I was. We will see.

Originally published at on June 1, 2021.