Before investing in a bank or post office, people often wonder how many years it will take for their deposited amount to double or triple. Previously, money deposited in banks would double in 9 years, but now, in a post office, it doubles in 10 years.
If you invest in the stock market, mutual funds, or equities, your money can double in 5 years and triple in 7.5 years. In this context, many people ask how much their investment will grow in 10 years. Here, we will explain this in detail using the Rule of 72, along with calculations to show how much your money will grow in a decade.
How to Calculate the Growth of Your Money
The Rule of 72 is a simple financial formula used to estimate how long it will take for your money to double or triple. Using this rule, you can also determine how much your investment will grow in 10 years. While financial experts often rely on tools like Microsoft Excel or spreadsheets for these calculations, the Rule of 72 provides an easy and accessible method for everyone.
What Is the Rule of 72?
The Rule of 72 is a simple method to estimate how long it will take for an investment to double in value at a fixed annual interest rate. To calculate, divide 72 by the annual rate of return. This gives an approximate number of years it will take for the initial investment to double (Profitable Business Idea).
The estimate is quite accurate, especially for lower interest rates. However, for more precise calculations that include compound interest, the Rule of 69.3% can be used.
How Does the Rule of 72 Work?
With the Rule of 72, you can calculate how many times your investment will grow over a specified period. For example, if you invest in mutual funds or equities, you’ll first check the historical return rate of the investment.
If the fund offers a return of 20%, divide 72 by 20. The result is 3.6, which indicates that your investment will double in 3.6 years.
Finding Growth Over 10 Years
Once you know the time it takes for your money to double (3.6 years in this example), you can calculate its growth in 10 years. Divide 10 by 3.6, which equals approximately 2.77. Multiply this figure by 2 (as the amount doubles). The result is 5.55. This means your investment will grow 5.55 times in 10 years if the fund maintains a 20% return rate.
Does the Rule of 72 Work for Stocks?
Stocks don’t have a fixed rate of return, so the Rule of 72 can’t predict how long it will take to double your money in the stock market. However, you can still use it to estimate what average annual return you need to double your money in a specific number of years. Instead of dividing 72 by the rate of return, divide it by the number of years you want your money to double. For example, if you want to double your money in eight years, divide 72 by 8. This tells you that you would need an average annual return of 9% to double your money in eight years.