This Rule Will Tell You How Many Years It Will Take for Your Money to Double
Every time you invest in a scheme, you wonder how long it will take to double your money. If you put your money in the right place, it can grow significantly over the years. It can double or even triple due to compound interest.
It is not known exactly how long it will take for the money to grow. The calculation done by estimation may not be completely accurate to the last decimal, but it can give a good idea of your return from any investment. Rule of 72 and Rule of 114) There is a simple rule that will tell you how fast your money can grow. They should be used judiciously for making investment decisions.
Rule of 72
This rule will tell you how many years it will take for your money to double. The formula is simple – divide the scheme’s interest rate by 72 to find the number of years it will take to double your investment. For this there has to be a particular rate of rate of return.
Years taken to double your money = 72 / Rate of Return
How to triple your money
If you’re curious to know how long it will take to triple your money, you’ll need to use the rule of 114. It works the same way as the rule of 72. To find how many years it will take you to triple your return from investment, you need to divide 114 by the rate of return.
Years taken to triple your money = 114 / Rate of Return
It will take 16.05 years to get Rs 50,000 from PPF account to Rs 1,50,000 with 7.1 percent interest rate.
Note that the Rule of 72 works on annual returns. It can be applied across all tenors provided the rate of return is compounded annually. If you apply the same rule to calculate your quarterly or half yearly compounded return, it will not give you the correct figure.
How Much Return You Will Need
You can also use these rules to find out what interest rate you would need to double your money over a specific period of time. Anyway, while investing, we all have a financial goal in mind in which this rule will be useful.
Rate of return required to double your money = 72/number of years
Rule 3 of 72 is one of the essential personal finance topics that can help you understand investments and returns. Also, compounding formula works best if you start investing early.
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