How fast can your Money double/triple?

Food, clothing and shelter are the basic requirements for every human being, and money is the means to satisfy these requirements. We all work day and night for making money. But it is equally important to ensure that it is used for the right purpose and at the right time. This is where the concept of saving and correctly investing our money comes into play. But how many of us actually invest this saved money?

We’ve all heard that money attracts money, but the fact is “Money does not grow by itself, we have to make it grow.” And if you don’t make it grow, the ever increasing Inflation will eat away your Savings.

But how to calculate the time it takes to double or triple your money?

One way is to use compound interest formula and add the principal amount to the interest or use the complex formula for calculating future value of money. But not everyone has the knowledge or the time to use these complex formulas and for them there is the other method, a shortcut, by which by which we can get the answer quickly using the simple rules listed below.

How fast does your Money double?

Rule of 72

This is very simple rule. Simply divide 72 by the Annual Interest Rate and this is the time it will take you todouble up your money. This answer derieved from this Rule is an approximation.

For e.g.:- If you Invest 50,000 at 9% p.a., it will take you 8 years (72/9), to double up your money.

Rule of 69

To compute the exact time required to double up your money, divide 69 by the Annual Interest Rate and then add 0.35 to it.

For e.g.:- If you Invest 50,000 at 9% p.a., it will take you 8.017 years (69/9 + .35)

How fast does your Money triple?

In today’s time we aren’t satisfied just with doubling up the money. We want to triple the money. The followingruleis a simple way to compute the time needed to triple your money.

Rule of 114

Divide 114 by the Annual Interest Rate to compute the time required to triple your money.

For e.g.:- If you Invest 10,000 at 8% p.a., it will take you 14.25 years (114/8) to triple your money.

How fast does inflation erode your non-invested Money?

And in case, you don’t believe in Investing and only end up Saving, you will see the curses of Inflation. The current rate of 7% Inflation will soon reduce the value of your money to half. The rule to calculate how fast inflation reduces the value of your money to half is given below:

Rule of 70

Divide 70 by the Inflation Rate to compute the time frame by which the value of your money would be reducedto half.

For e.g.:- If you have 10,000 and the Inflation Rate is 7%, the value of your money would be reduced to half in70/7 = 10 years.

So the choice is yours, either double/triple up your money or let inflation slowly erode your savings.