Investment Calculation: The biggest challenge before investors in the financial market is when and how their hard earned money will be doubled. Return rates are different in options like mutual funds, equity, FD or PPF PF. However, an easy mathematics exists to assess investment, Rule of 72 ‘. This is a very easy formula, with the help of which you can guess how many years your money can be doubled in any investment.
What is Rule of 72?
Every investor wants to increase his assets and achieve financial goals. Whether it is to increase the net worth, prepare a retirement fund, raise children’s education or marriage expenses. But the problem is that many people do not understand how much their investment will increase. It makes its difficulty easier, Rule of 72.
This is actually basic calculations, from which investors can estimate how many years their money will be doubled on any investment. The formula is extremely easy, share 72 from the interest rate or return rate of that investment. The answer that comes will be the number of years in which investment will be doubled.
Where this formula applies
According to investment experts, the Rule of 72 is a “hand-tool”, which helps to guess rapidly. This applies to compounded interest rates and gives a large extent to 6 to 10 percent of the return range. Its specialty is that it can be applied not only in investment, but also in other areas like inflation and GDP growth.
How does 72 rules work?
Important tools for investors
Rule of 72 is a simple guide for investors. However it gives a thick estimate and actual returns depend on market conditions. But this can prove to be extremely useful in making initial investment plans.
Disclaimer: Here information provided is being given only for information. It is necessary to mention here that the investment market in the market is subject to risks. Always consult experts before investing money as an investor. There is never advice to anyone to invest money on behalf of Moneycontrol.