Every investor dreams of doubling their money as quickly as possible.
But how long does it actually take? What’s the right way to calculate it? And what percentage of return is needed? The answer lies in the Rule of 72, a simple formula that helps determine how fast an investment will double.
Additionally, the Rule of 114 and Rule of 144 are useful for calculating how long it takes for an investment to triple or quadruple, respectively.
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how many years it will take for an investment to double at a given rate of return. The formula is:
Time to Double = 72 ÷ Interest Rate
For example:
If an investment offers an 8% annual return, your money will double in 9 years (72 ÷ 8 = 9).
If the return is 12%, your money will double in 6 years (72 ÷ 12 = 6).
When Will Your Money Triple?
To find out how long it takes to triple your investment, use the Rule of 114:
Time to Triple = 114 ÷ Interest Rate
For example:
At an 8% return, your money will triple in 14.25 years (114 ÷ 8 = 14.25).
At a 10% return, it will take 11.4 years (114 ÷ 10 = 11.4).
How Long to Quadruple Your Investment?
If you want to know when your money will quadruple, use the Rule of 144:
Time to Quadruple = 144 ÷ Interest Rate
For example:
At an 8% return, your money will quadruple in 18 years (144 ÷ 8 = 18).
At a 12% return, it will take 12 years (144 ÷ 12 = 12).
Key Takeaway
These simple rules help investors estimate their potential gains and make informed decisions.
By understanding the Rule of 72, 114, and 144, you can plan your investments wisely and achieve your financial goals faster!
