Rule of 72 114 144
In this blog, we will see, how to apply Rule of 72 114, and 144, What it is, and how to use it. This rule calculates the period when an investor’s investment gets double, triple, or quadruple (4 times). Investors invest their hard-earned money to get returns from their investments. While calculating future returns from their investment, they are interested in finding out the period in which their money becomes double, triple, or quadruple (4 times). It is here, that this Rule of 72 114 and 144 becomes very handy. Using this rule one can quickly find out the period when their invested money becomes double, triple, or quadruple. This rule is trendy and widely used among investors.
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We will try to understand this Rule of 72 114 144 by taking the below example.
The Rule of 72
This rule is used to find out the period in which an investor’s money gets doubled.
(1) Suppose an Investor Mr. ‘X’ invests Rs. 50,000 in some shares of ‘Y’ Company. He is expecting return of 12%. He wants to calculate the period it will take to double his invested money.
By applying the rule of 72,
72 ÷ 12 (Rate of Return) = 6 Years.
It will take 6 years to double Mr. X’s Rs. 50,000/- to Rs. 1,00,000/- if he gets an expected return of 12 %.
(2) Same way if Mr. ‘X’ gets a return of 18% on his investment of Rs. 50,000=00.
Then his money will get doubled in 4 Years. (72 ÷ 18 ) = 4 Years.
The Rule of 114
This rule is used to find out the period in which investors’ money gets Tripled.
(1) Suppose an Investor Mr. ‘X’ invests Rs. 50,000 in some shares of ‘Y’ Company. He is expecting return of 12%. He wants to calculate the period it will take to triple his investment.
So 114 ÷ 12 ( Rate of Return) = 9.5 Years.
It will take 9.5 Years to triple the investment of Mr. ‘X’ of Rs. 50,000/- to Rs. 1,50,000, if he gets an expected return of 12 %.
(2) Same way If Mr. ‘X’ gets a return of 18% on his investment of Rs. 50,000=00.
Then his money will get Tripple in just 6.3 Years. (114 ÷ 18 ) = 6.3 Years.
Rule of 144.
This rule is used to find out the period in which investors’ money gets quadrupled ( 4 times)
1.. 144 ÷ 12 (Return Rate) = 12 Years. It will take 12 Years to make your investment quadruple i.e. Rs. 2,00,000=00 if you get a 12% return on investment.
- 2. 144 ÷ 18% (Return Rate) = 8 Years… It will take just 8 Years to make your investment quadruple if you get an 18% return on investment.
By using rules of 72 114 and 144,
you can easily find out the period it will take to double, triple, or quadruple your investment.
This Video will explain Reader the Rule of 72 114 and 144
Also, you can find out the annual rate of compounding, given the number of years in which investment will double.
72 ÷ ? = 5… The answer is 12 (Rate of Return).
Your investment should grow at 12 % to double in 5 years
114 ÷ ? (Rate of Return) = 9.5 Years.
Your investment should grow at 12 %to get it triple in 9.5 Years.
144 ÷ ? = 8 Years.. Your investment should fetch a return of 18% to get it quadruple in 8
Years.
How to use Rules of 72 114 and 144 in investment planning.
Investors can use this rule, to calculate the period in hand to achieve the investment goals. The investor can increase or decrease his investment amount accordingly. Investors can also calculate the return rate they should fetch to achieve the expected goal amount in a particular period.
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