Rule 72: Explained
The Rule of 72 is your quick guide to doubling investments. Divide 72 by the interest rate to find out how long it takes. For example, with a 9% return,
your money doubles in about 8 years. It is a foundational concept for smart financial planning.
Doubling to Tripling
The Rule of 114 helps estimate the time to triple your investment. Similar to the Rule of 72, you divide 114 by your expected annual return. This helps you project the timeline for significant wealth growth, which is crucial for long-term financial goals.
Rs 5 Lakh to 10 Lakh
To turn Rs 5 lakh into Rs 10 lakh using the Rule of 72, figure out the interest rate needed. If the investment grows at 9% annually, it will take approximately 8 years. This strategy can make wealth creation a manageable goal.
Rs 5 Lakh to 15 Lakh
For tripling your investment, you would use the Rule of 114. Applying the same 9% return, your Rs 5 lakh would reach Rs 15 lakh in about 12-13 years. Compounding is the key to these impressive returns over time.
Compounding: The Power
Compounding is a powerful force in wealth building. It's your money earning returns and those returns earning further returns. With both rules, understand how different return rates and longer investment horizons impact your financial growth and make a tangible difference.
