ET Mutual Funds Explains: Want to know how many years will your investment take to triple? Use Rule 114 (2024)
Rule 72 in mutual funds tells you in how many years will your investments take to double, while Rule 114 helps you know in how many years will your investments take to triple.
In this rule, an investor takes the number 114 and then divides it by the investment product's rate of return to achieve this. In other words, in this rule you divide 114 by the rate of return to find out the number of years.
For example, if with a 6% return your investment amount will take 19 years to triple. Tripling your money might look like a long-term goal, but understanding this rule can help an investor set goals and make smart decisions.
The below-mentioned table helps you determine what rate of return you will earn at different time periods
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This rule is considered ideal for investors of all experience. This rule offers a rough amount for tripling the investment.
Rule 114 provides a reasonable timeframe than anticipating an overnight double in the money.
Rule 114 is considered an effective tool for investors who want to plan long-term wealth creation and want to take advantage of compounding.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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Rule of 114: To estimate when your money will triple, divide 114 by the annual interest rate. For an 8 per cent return, 114/8 = 14.25 years. Thus, your money will triple in about 14.25 years. Rule of 144: To determine when your money will quadruple, divide 144 by the annual interest rate.
Rule of 115: If 115 is divided by an interest rate, the result is the approximate number of years needed to triple an investment. For example, at a 1% rate of return, an investment will triple in approximately 115 years; at a 10% rate of return it will take only 11.5 years, etc.
Rule 144 determines the time to quadruple investments at a given rate of interest. This is twice the Rule 72, where dividing 72 by the interest rate gives the doubling time.
"Rule of 72 and 144 is nothing but an easy method of calculating how long it will take for an investment to double and quadruple respectively. This rule is applicable for any financial investment, be it Mutual Fund, Fixed Deposit (cumulative) etc.
After the rule of 72 comes the Investment rule of 114 which tells an investor how long will it take for their money to triple itself. Going by the same example of a Rs 2 lakh investment with an annual return of 12%, the time it is going to take to triple your money would be (114/12) = 9.5 years.
Similarly, the rule of 114 tells you approximately the number of years needed to triple your money. Use this rule to find out the time it will take your investment to quadruple. Instead of 72 you just need to use 144 (2 x 72 = 144). For instance, if your return is 9% you need to divide 144 by 9 and you will get 16.
Let P be the principal amount. So the final amount i.e. triple amount will be equal to 3P. So, the time period is equal to 18.85 which is almost equal to 18 years 10 months. Hence, 18 years 10 months long it will take you triple your money if you invest it at a rate 6% compounded annually.
SEC Rule 144 outlines the conditions under which restricted and control securities can be sold in the public market. Rule 144 requires affiliates of an issuing company who want to sell their holdings to wait for at least a minimum holding period and comply with various reporting requirements and disclosures.
Section 144 of CrPC generally prohibits public gathering. Section 144 has been used in the past to impose restrictions as a means to prevent protests that can lead to unrest or riots. The orders to impose Section 144 have been conferred to Executive Magistrate when there is an emergency situation.
All affiliates are required to file a Form 144, notifying the SEC if the sale of securities within any three-month period exceeds either 5,000 shares or a total dollar amount of $50,000.
How the Rule of 72 Works. For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years ((72 ÷ 10) = 7.2) to grow to $2. In reality, a 10% investment will take 7.3 years to double (1.107.3 = 2). The Rule of 72 is reasonably accurate for low rates of return.
For instance, if you were to invest $100 at 9% per annum, then your investment would be worth $200 after 8.0432 years, using an exact calculation. The rule of 72 gives 72/9 = 8 years, which is close to the exact answer.”
The Rule of 72 predicts how long an investment will take to double based on a fixed annual interest rate. The rule is this: 72 divided by the interest rate number equals the number of years for the investment to double in size. For example, if the interest rate is 12%, you would divide 72 by 12 to get 6.
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To calculate how long it takes money to double, divide the interest rate into 72. To see how long money triples, divide it into 115. Assuming a 7% interest rate, it will take approximately 10.3 years for the original principal to double and 16.4 years to triple.
Rule 72 predicts the time it takes for investments to double, while Rule 114 determines the time to triple. By dividing the respective number by the rate of return, investors can gauge their investment's growth trajectory.
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