Do you know the Rule of 72? It's an easy way to calculate just how long it's going to take for your money to double. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.
The Rule of 72 is a simple formula that is used to estimate the time it takes for an investment to double in value, based on a fixed annual rate of return. It is more commonly used to determine compound interest, but it can be used in real estate too.
The rule of 72 is only an approximation that is accurate for a range of interest rate (from 6% to 10%). Outside that range the error will vary from 2.4% to 14.0%.
The rule is this: 72 divided by the interest rate number equals the number of years for the investment to double in size. For example, if the interest rate is 12%, you would divide 72 by 12 to get 6. This means that the investment will take about 6 years to double with a 12% fixed annual interest rate.
Final answer:
It will take approximately 15.27 years to increase the $2,200 investment to $10,000 at an annual interest rate of 6.5%.
This rule is based on the principle of compounding interest and suggests that if you invest in a mutual fund with a 12 per cent annual return, your investment will double approximately every 8 years. After the first doubling, it will double again in the next 4 years, and then a final time in the subsequent 3 years.
However, the Rule of 72 is based on a few assumptions that may not always be accurate, such as a constant rate of return and compounding period. It also does not take into account taxes, inflation, and other factors that may impact investment returns.
The theme of the rule is to save your first crore in 7 years, then slash the time to 3 years for the second crore and just 2 years for the third! Setting an initial target of Rs 1 crore is a strategic move for several reasons.
For example, an investment with a 3% annual interest rate will take about 24 years to double your money.
The Bottom Line. Safe assets such as U.S. Treasury securities, high-yield savings accounts, money market funds, and certain types of bonds and annuities offer a lower risk investment option for those prioritizing capital preservation and steady, albeit generally lower, returns.
The rule of 72 states that for a simple way to work out how long it has taken a property or an area to double in value, divide 72 by the annual growth rate. For example, if you think a property will grow 10% per annum, just divide 72 by 10% and that tells you that it'll take 7.2 years to double.
To answer the question of how to double my money quickly, simply invest in a portfolio of investment options like ULIPs, mutual funds, stocks, real estate, corporate bonds, Gold ETFs, National Savings Certificate, and tax-free bonds, to name a few.
72 ÷ number of years in which you want the investment to double = targeted annual rate of return. For instance, if you know you want your money to double in 6 years, the rule of 72 would have you looking for an investment with an annual rate of return of around 12% (72÷6=12).
Before buying an item, figure out how many times you'll use it. If it breaks down to $1 or less per use, I give myself the green light to buy it.
Einstein also said that “If people really understood the Rule of 72 they would never put their money in banks.” Suppose that a 10-year-old has $500 to invest. She puts it in her savings account that has a 1.75% annual interest rate.
The 8-8-8 Rule would be the best place to start if you want to enhance your creativity. This rule states that you should dedicate eight hours to sleep, eight hours to work, and eight hours to leisure activities. By following this schedule, your body will be ready to focus on creative tasks when it is time for leisure.
The 15-15-15 rule suggests investing 15% of your income for 15 years in a mutual fund with 15% annual returns. Compounding is the process of reinvesting earnings to generate more returns. The longer you stay invested, the greater the compounding effect. =
In modern life, time management is an essential skill that helps us maintain balance and success. A simple but effective rule to help divide time appropriately is the "8 8 8" rule. By allocating 8 hours for work, 8 hours for sleep and 8 hours for free time and personal interests, we can create a balanced schedule.