Investment Planning: Whenever we invest money in any scheme, the first thing that comes to our mind is its profit and the calculation of investment. But, before investing anywhere, if you want to know how much return you will get, you can easily find it out.
You can know in how much time your invested money will double, triple and quadruple.
For this, you will have to use a certain formula. Let us tell you about it.
Rule of 72
The first formula is Rule of 72. This formula is considered very important from the investment point of view.
This formula shows how much time will it take for your money to double.
Most experts consider this to be a fairly accurate formula for calculation.
To apply this formula, you should know about the annual interest received on a scheme.
After this you will have to divide that interest by 72. This lets you know in how much time your money will double.
Understand it through an example
Suppose you invest in post office fixed deposit (FD) for 5 years.
At present, the interest rate given on the FD is 7.5 per cent.
In such a situation, when you divide the current interest rate by 72, the answer will be 72/7.5 = 9.6.
According to this calculation, your money will double in 9 years and 6 months.
Rule of 114
If you want to know when your money will triple, then Rule of 114 will be useful to you.
This formula is similar to the Rule of 72 and is used in the same way for calculations.
Let us take the example of post office FD here also.
To know how much time will it take for your money to triple in post office FD, you will have to use the formula 114/7.5.
After calculation, the answer will be 15.2, i.e., according to 7.5 per cent interest rate, your invested money will triple in 15 years and 2 months.
Rule of 144
Rule of 144 tells you how much time will it take for your amount deposited in a scheme to quadruple.
Suppose you are investing in a scheme which is giving interest at the rate of 6 per cent, then 144/6 = 24, i.e., your amount will become four times in 24 years.
Whereas, if the interest rate is 7.5 per cent, then it will take 19 years and 2 months for the amount to quadruple.
If the interest rate is 8 per cent, then the amount will quadruple in 18 years.