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everyone Invests to secure the future. Investors invest in bank FD, PPF, mutual funds or small savings schemes, according to their financial goals. If you have also invested in PPF, MF or bank fixed deposit, then do you know in how many days your money will double. If not then there is no need to worry. We are telling you about Rule 72 used in financial planning. By using this formula you will easily calculate in how many days your investment money will double.
What is Rule 72 and how does it work?
Rule 72 gives you an estimate of how many years it takes for your investment in an investment vehicle to double. That is, how much time will it take for your investment to double. To use this formula, the interest rate is divided by 72. For example, if you are getting 6% return in bank FD then divide 6 by 72. That means 72/6 = 12, i.e. investment made in bank FD will double in 12 years. However, this rule gives correct calculations at 6 to 10 percent interest. This may make a slight or drastic difference in your calculation of interest. In such a situation, it is absolutely fine for a normal interest rate.
How to calculate PPF?
Currently you get 7.1 percent interest on your Public Provident Fund (PPF) deposits. The interest rates on PPF have not been revised since April 2020. With 7.1% on PPF it will take around 10 years for your money to double. The formula is implemented as follows:
rule of 72
= 10.14 years
Calculating Mutual Fund Investment?
Financial experts say that if one invests in a disciplined manner, mutual funds can give around 12-15% returns in the long run. Therefore, an investment of Rs 1 lakh in MF will double (Rs 2 lakh) in six years.
The formula is implemented as follows:
= 6 years
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