Ask most people how their money grows and they will answer in years: a percent here, a good year, a bad year. It is the wrong unit. Compound growth has a natural clock, and it does not tick in years. It ticks in doublings.
The Rule of 72
Divide 72 by your real return and you get the number of years it takes your money to double. At 7% real — a reasonable long-run figure for a diversified portfolio after inflation — that is a shade over ten years. Call it a decade.
So a pound invested today is worth about two pounds in a decade, four in two decades, eight in three. The growth is not a gentle slope. It is a staircase, and each step is twice the height of the one before.
This is the whole idea behind the way our website is laid out: every figure on it is printed at the size it has grown to, and a decade doubles the size the same way it doubles the pound. The type is the chart.
What it changes
Two things follow, and they pull in opposite directions.
The first is calming. If the unit is a decade, a bad year is noise. The market can fall 20% and you have lost, in decade terms, almost nothing that matters — provided you do not sell. Time in the market is not a slogan; it is arithmetic. The last doubling, the one from age 55 to 65, adds more pounds than the first three combined, because it works on the largest balance.
The second is urgent. The pound with the most decades left to double is the pound you invest today. A pound invested at 35 gets three doublings before 65. The same pound invested at 45 gets two. You cannot buy those lost doublings back later with a bigger contribution — a bigger contribution simply has fewer decades to work in.
The practical version
- Measure your plan in decades. Where will each pot be at the next doubling?
- Treat starting early as the single highest-leverage decision. It usually beats picking better funds.
- Do not interrupt a doubling to chase a year.
None of this requires clever products. It requires staying in, for a long time, at a sensible cost — which is the subject of the next piece.