How to Double your Money

Most of us earn money and leave it into either a bank account or some other investments. Banks and Markets will give decent interest rates every year. But most people don’t know the exact figure of interest rates and how to calculate it. People & Investors want to know how long it will take their investment to double?? It may be 5 years or 10 years and so on. But what is the formula to calculate it?

1.How to calculate the no.of years for doubling your Investments???

2.How to calculate the annual interest rate with a certain period for doubling your investments???

Then here is the simple way & shortcut for calculating it. Yes… Rule of 72… It will help to calculate the Interest rate as well as no. of years to double our investments without using any excel sheet, complicated formula, calculator handy.

What is the Rule of 72

The Rule of 72 is an easy way to calculate how long it will take an investment to double with a fixed annual rate of return. This rule helps to know the power of compound interests as well. But Simple interest does not work well with the Rule of 72.

The formula is

Years to Double = 72 / Annual interest rate

How to use the Rule of 72

If an Investor invests Rs.100000 with an annual return of 8%, then he would get his investment to double in 9 years.

Years to double = 72 / 8

= 9 year

From this above table, we can see the difference in doubling time when the interest rate increases or decreases. For example an investment with an annual return of 3%, then doubling time of investment is in 24 years. If the interest rate increased by 1% which is 4%,doubling time would be 18 years only. This is an example of Power of Compounding which helps to grow your investment fast.

Conclusion

Now we all know about the value of investing and high returns. This Rule of 72 purely involves with compound interest which helps to grow our investment substantially. So using this rule you can get an idea about how to double your investments. Hereafter you can set your investments according to this and would experience financial security.

Be wise… Get Rich!!!