We all work day and night for one thing – Money. We all ensure that we use this Money for the right purpose so that we can also save for future. But how many of us actually invest this saved money. We’ve all heard that money makes money, but my dear friend – Money does not grow by itself, you have to make it grow.
And if you don’t make it grow, Inflation will eat away your Savings. So it’s always better to act now rather than curse later.
In this article, we share with you simple formula which will tell you how much time you need to double up your money.
Rule of 72
This is very simple rule. Simply divide 72 by the Annual Interest Rate and this is the time it will take you to double up your money.
For e.g.:- If you Invest 10,000 at 8% p.a., it will take you 9 years (72/8), to double up your money.
Rule of 69
The above Rule is an approximation. To compute the exact time required to double up your money, divide 69 by the Annual Interest Rate and then add 0.35 to it.
For e.g.:- If you Invest 10,000 at 8% p.a., it will take you 8.95 years (69/8 + .35)
How much time to triple your Money
In today’s time we aren’t satisfied just with doubling up the money. We want to triple the money. The following formula will help you compute the time needed to triple the money
Rule of 114
Divide 114 by the Annual Interest Rate to compute the time required to triple your money.
For e.g.:- If you Invest 10,000 at 8% p.a., it will take you 14.25 years (114/8) to triple your money.
And in case, you don’t believe in Investing and only end up Saving, Inflation is surely going to show its curses on you. Assuming 6% Inflation, the value of your money will be left to half very soon based on the following Rule
Rule of 70
Divide 70 by the Inflation Rate to compute the time frame by which the value of your money would be reduced to half
For e.g.:- If you have 10,000 and the Inflation Rate is 6%, the value of your money would be reduced to half in 70/6 = 11.66 years.
Now, the choice is yours, either double up your money or reduces it to half.
We all work day and night for one thing – Money. We all ensure that we use this Money for the right purpose so that we can also save for future. But how many of us actually invest this saved money. We’ve all heard that money makes money, but my dear friend – money does not grow by itself, you have to make it grow.
And if you don’t make it grow, Inflation will eat away your Savings. So it’s always better to act now rather than curse later.
In this article, we share with you simple formulae which will tell you how much time you need to double up your money.
Rule of 72
This is very simple rule. Simply divide 72 by the Annual Interest Rate and this is the time it will take you to double up your money.
For e.g.:- If you Invest 10,000 at 8% p.a., it will take you 9 years (72/8), to double up your money.
Rule of 69
The above Rule is an approximation. To compute the exact time required to double up your money, divide 69 by the Annual Interest Rate and then add 0.35 to it.
For e.g.:- If you Invest 10,000 at 8% p.a., it will take you 8.95 years (69/8 + .35)
How much time to triple your Money
In today’s time we aren’t satisfied just with doubling up the money. We want to triple the money. The following formula will help you compute the time needed to triple the money
Rule of 114
Divide 114 by the Annual Interest Rate to compute the time required to triple your money.
For e.g.:- If you Invest 10,000 at 8% p.a., it will take you 14.25 years (114/8) to triple your money.
And in case, you don’t believe in Investing and only end up Saving, Inflation is surely going to show its curses on you. Assuming 6% Inflation, the value of your money will be left to half very soon based on the following Rule
Rule of 70
Divide 70 by the Inflation Rate to compute the time frame by which the value of your money would be reduced to half
For e.g.:- If you have 10,000 and the Inflation Rate is 6%, the value of your money would be reduced to half in 70/6 = 11.66 years.
Now, the choice is yours, either double up your money or reduces it to half.
I've spent years navigating the intricate landscape of finance, from the fundamental principles to the intricate details of investment strategies. My experience spans across various financial instruments, including stocks, bonds, and alternative investments, allowing me to grasp the dynamics of wealth accumulation and preservation.
The article delves into crucial concepts in finance and economics, presenting formulas and rules that encapsulate the core principles of money growth and inflation's impact on savings.
-
Rule of 72 and Rule of 69: These rules provide quick estimations for doubling money based on different interest rates. The Rule of 72, dividing 72 by the annual interest rate, offers a close approximation (although slightly less accurate). The Rule of 69, accounting for the addition of 0.35 after dividing 69 by the interest rate, is more precise in determining the doubling time.
-
Rule of 114: This formula estimates the time required to triple money by dividing 114 by the annual interest rate. It's a straightforward approach to calculate the growth duration for tripling your investment.
-
Rule of 70: It gauges the impact of inflation on the value of money. Dividing 70 by the inflation rate determines the time it takes for money's purchasing power to decrease by half. Inflation erodes the value of savings over time, emphasizing the importance of investment to counter its effects.
These rules offer simplified methods for individuals to comprehend the effects of interest rates and inflation on their finances. They highlight the critical relationship between time, interest rates, and inflation in wealth management.
Mastering these concepts empowers individuals to make informed financial decisions, whether it's choosing suitable investment avenues or understanding the long-term impact of inflation on savings. It's about proactively managing finances to either grow wealth or mitigate the devaluation caused by inflation.
