Personal Finance: In how many years will your investment double? Know from this rule of personal finance

Personal Finance: Returns play a big role in everyone’s decision when it comes to investing. People invest to earn as much as possible while keeping their savings safe. In such a situation, the biggest question that comes to people’s mind is how much time it will take for their investment to double.

Fun rules of personal finance

If you have ever faced such questions while investing, then a simple rule of personal finance will make the entire calculation possible in a jiffy. This rule of personal finance is known as Rule 72 or Rule 72 of Personal Finance. With its help, you can easily find out how much time it will take for the investment you have made to double.

These are the rules for compound interest

In fact, people get simple interest on many types of investments, while in many cases, the benefit of compound interest is available. In the case of compound interest, i.e. compounding, it takes less time for investors to double their money, but its calculation becomes a bit complicated. Rule 72 of personal finance makes this calculation easy.

Effect of inflation on money

Before knowing this rule, it is important to understand how inflation affects your money. Inflation has a direct impact on everyone’s purchasing power. Due to this, the value of money does not remain stable and keeps decreasing year after year. This is the reason why experts always advise investors to choose those investment options which are giving more returns than the rate of inflation, because only then the value of your money is increasing.

This is how the rule works

Now suppose you are investing Rs 10 lakh. You have made an FD in a bank and the bank is offering you compound interest at the rate of 8 percent on FD of Rs 10 lakh. According to Rule 72, you have to divide 72 by the rate of return. Now the number obtained will be the number of years it will take for your investment to double. In this case, dividing 72 by 8 gives 9. That means in an FD giving 8 percent interest, it will take 9 years for your Rs 10 lakh to become 20 lakh.