The rule of 72 is a great shortcut mental math tool to tell you approximately how much return you need to double your money in x years.
Rule of 72
No. of years to double = 72 / Annual rate of return you earn on your investments
So next time you’re advising a financial product to your client, you can use this handy tip to provide an additional perspective.
You can also use the above formula to know how long will it take to double the investment if it is earning x% interest p.a.
Hence, you can easily make your client’s Rs. 1 lakh – sixteen times in 24 years on investing it for 12% p.a.. Applying the rule of 72, money will double every 6 years ! Below is the calculation for your reference –
Age 22 – Rs. 1,00,000
Age 28 – Rs. 2,00,000
Age 34 – Rs. 4,00,000
Age 40 – Rs. 8,00,000
Age 46 – Rs. 16,00,000