How long does it actually take to double your money?

The value of your investments and the income you receive from them can go up and down, and you may get back less than you invest. Any examples are for illustration purposes only. ISA eligibility and tax rules apply.

You’ve put your hard-earned cash to work in the stock market and you want to know when it’s going to turn into twice as much.

The short answer: just over 10 years.

The more painful version: a lot longer, if you aren’t using a stocks & shares ISA.

Let’s find out why and which timeline you fall into. But before we do that - you know the drill: all the calculations and permutations you see are for purely informational purposes and neither you nor any of our upcoming imaginary friends should construe them as tax advice. If in doubt, chat to an independent financial adviser. With those pre-flight checks done, let’s go.

In investing, there’s a handy shortcut when you want to know how long it’ll take to double your money: you take the number 72 and divide it by your expected average annual return. For example, if we assume a portfolio will generate a 7% annual return, in line with the historical average of the S&P 500 index, our sum would look like this:

• 72 / 7 = 10.3 years.

£20,000 invested today, growing at 7% each year, would turn into £40,000 in just over 10 years’ time - that’s the magic of compound interest doing the heavy lifting in the background. Of course, this is all hypothetical and markets don’t tend to offer up that level of consistency. Still, it helps give us a guide based on historical averages.

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There is a catch though - the maths only works when we ignore UK investment tax. That makes sense if we’re investing inside a stocks & shares ISA because the account’s tax efficiencies mean you wouldn’t have to pay UK dividend tax or UK capital gains tax on any gains you might make. If we compare that to the same investment journey made outside an ISA, the time gap really starts to open up.

Let’s imagine you’ve never heard of an ISA and decide to put that same £20,000 into a general investment account (GIA) that doesn’t come with any tax efficiencies. You still target a 7% annual return, made up of 4% capital growth and a 3% dividend yield, but the 2026/27 UK investment tax rules are now waiting to potentially throw a spanner in the works. Here’s how.

1. The steady dividend drip

The current annual dividend allowance in the UK is £500. Earn more than that and you’ll likely have to pay UK dividend tax on the portion above the allowance, according to the tax band you fall into.

Given the 3% dividend yield on your £20,000 would generate £600 in year one, you would breach the allowance immediately. So, instead of reinvesting all your gains to kickstart the compounding effect, you are leaking cash right from the beginning. Because you have less money to reinvest, your compound growth rate drops instantly, compared with our ISA investor.

2. The final blow - UK capital gains tax

While UK dividend tax will likely be an annual occurrence in our example, we only have to think about UK capital gains tax when it comes to selling our investment. For reference, in 2026/27 your UK capital gains tax allowance is £3,000 - any gains above that would attract 18% tax for basic-rate taxpayers, and 24% tax for higher/additional-rate taxpayers.

This double whammy (annual dividend taxes slowing your compounding and capital gains tax popping up at the finish line) means a higher-rate taxpayer would have to stay in the market for an extra year and a half just to hit the same £40,000 goal as our ISA investor.

Here’s the breakdown of how much four portfolios would have to grow to walk away with £40,000 after all UK dividend and UK capital gains taxes have been settled.

These figures account for the “cost basis step-up” of reinvested dividends, ensuring investors aren’t double-taxed on the same money. All available dividend income is reinvested. The end delay is the reality of current tax rates.

The differences here don’t come down to wildly distinct investment strategies - the only thing that has changed is the account. It puts in perspective how valuable a stocks & shares ISA can be, even before you choose your investments.

For me, it also shows that an ISA isn’t just a nice-to-have perk for the outrageously wealthy. UK investors trying to build up a house deposit, wedding fund or retirement cushion could well find themselves in a similar situation to our illustrations above, and could well cross into tax territory without even knowing it. It’s why considering an ISA could be useful if you want to give that compounding effect the best chance of working for you, as well as making sure there are no big UK investment tax bills waiting for you when it comes to actually using your money.

Important information

When investing, your capital is at risk. The value of your investments, and the income you receive from them, can go down as well as up and you may get back less than you invest. Forecasts aren’t a reliable guide to future results or returns.

Make sure to do your own research on what investments are right for you before investing or consider seeking expert financial advice. Please note that this article is meant for information and does not constitute any financial advice. This is not an offer, recommendation, inducement or invitation to buy, sell, or hold any securities, or to engage in any investment activity or strategy. Robinhood doesn’t provide tax advice. You should seek advice if you have any questions regarding the impact your investments will have on your income tax and tax filing requirements.