By using the Rule of 72, you can also know how your money will double in 7 years and 2 months. Not only this, if the money is kept invested, it can be increased three times or even four times.
How to become Crorepati: Most experts say that if you want to lose weight, eat less and exercise more. The case of money is also similar. Reduce expenses and save more, then you will have a good bank balance. The sooner you start for retirement or other financial goals, the richer you will be by the time you get closer to the goal. There is the most accurate formula for this. By using the Rule of 72, you can also know how your money will double in 7 years and 2 months. Not only this, if the money is kept invested, it can be increased three times or even four times.
Compound interest will help
All you have to do is maintain the continuity of your savings and the rest of the work will be done by compound interest over time. The benefits of compounding are visible in the long term and it works wonders in making you a millionaire in the long term.
How does compound interest work?
Suppose you deposit 100 rupees somewhere and get 10 percent interest on it annually. After one year you will have 110 rupees. Next year, due to compounding, you will get 10 percent interest on 110 rupees and your money will grow to 121 rupees. Then next year you will get 10 percent interest on 121 rupees and this cycle will continue year after year. With time, you will see a surprising increase in your money.
When will the money double?
There is a common rule for calculating when your savings will double. This rule is Rule 72. It is widely used in finance. Through Rule 72, you can know in how much time your investment money will double. Let us know its formula.
Understand it like this
If you invest Rs 100 on which you get 10 percent compound interest annually, then according to Rule 72, this investment will take 72/10 = 7.2 years to double.
If you invest a larger amount than this, say Rs 1 lakh, then it will become Rs 2 lakh in about seven years. For this, do not forget to keep investing and increase the current fund, it will give you much more benefit.
What to do if you need crores for retirement
If you want to save crores of rupees for your retirement, then start as early as possible. If you start investing Rs 5,000 from the age of 25 and get a return of 10 percent annually on it, then at the age of 60 you will have a fund of more than Rs 1 crore.
What does Rule of 72 do?
Rule of 72 helps in knowing in how many years your money will double. The option giving 10 percent annual interest will double your investment in 72/10=7.2 years.
When will the money triple?
Rule 114- To find out in how many years your money can triple, you have to divide the interest you get by 114. Suppose you are getting 8 percent interest annually, then 114 has to be divided by 8. 114/8= 14.25 years, that is, in this scheme your money will triple in 14.28 years.
When will the money quadruple?
Rule 144- Rule 144 tells in how many years your money will quadruple. If you have invested at an annual interest rate of 8 percent, then your money will quadruple in 18 years. 144/8= 18 years.
