Dear Readers,
Did you know there is a quick hack using which you can calculate the time period in which your investment will be doubled, tripled and quadrupled? Do you want to know how fast can your money grow with different asset classes like PPF, Mutual funds, Bank FDs, etc.? Using hacks Rule of 72, Rule of 114 and Rule of 144, you can arrive at the answer. The Rule of 72 gives you an estimate of the number of years it will take to double your money in a particular investment, the rule of 114 gives you an estimate of the number of years to triple the investment amount, the rule of 144 gives you an estimate of the number of years to quadruple the investment amount.
How to calculate number of years to double using the Rule of 72?
You need to divide the number 72 by the rate of return of the asset to know the time it would take you to double your investments.
How to calculate number of years to triple using the Rule of 114?
You need to divide the number 114 by the rate of return of the asset to know the time it would take you to triple your investments.
How to calculate number of years to quadruple using the Rule of 144?
You need to divide the number 144 by the rate of return of the asset to know the time it would take you to quadruple your investments.
Let’s take an example for Bank fixed deposits (FDs)
Almost all banks provide Fixed Deposits ranging between 7 days to 10 years tenure. The interest rates vary from one bank to another depending upon the tenure. Bank FDs between 7 days to 10 years will give between 3% to 7%.
Suppose a person wants to invest ₹10 lakhs in Bank fixed deposit. So, assuming a bank FD offering an interest rate of 6.5% p.a., the formula is applied as below:
Rule of 72
=72/6.5
= 11.08 years
Rule of 114
=114/6.5
= 17.54 years
Rule of 144
=144/6.5
= 22.15 years
So, an investment of ₹10 lakhs in a bank FD will get doubled (i.e.₹20 lakhs) in approx. eleven years, triple to ₹30 lakhs in approx. 18 years and quadruple to ₹40 lakhs in approx. 22 years.
Using the same formula, period for other asset classes to double, triple and quadruple is as follows:
**The expected rate of return is considered based on historical averages.
With this DIY formula, investors can very easily find out the time their investments would take to double, triple or quadruple their money.
Also, as we can observe that the time period required for tripling and quadrupling goes on reducing due to the effect of compounding, which is also known as the ‘Eighth Wonder of the World’. Hence, it is always advised to stay invested for a longer term and reap the benefits of this wonder.
We hope the information so presented was useful.
To know more on the topic as well as to start investments please feel free to contact:
Team Richvik – +91 9324609115
Contact us: team@richvikwealth.in