Personal Investment: Rule of 72, 114 and 144 Explained (2024)

FAQs

Personal Investment: Rule of 72, 114 and 144 Explained? ›

Here's how they work: The Rule of 72 Divide 72 by your expected annual rate of return. The result is approximately how many years it will take for your money to double. Example: 72 divided by 6% annual returns = 12 years to double your money The Rule of 114 Divide 114 by your expected annual return.

Rules 72, 114, and 144 can be used to determine the period your investment can take to double, triple, and quadruple respectively. Follow the Minimum 10% Rule to get started with investing. Also, if you are beginning your investment journey, you might want to consider the Emergency Fund Rule.

The final rule in line is the Investment Rule of 144. As evident, this rule tells how long will it take for your money to become four times its original value or Quadruple. This rule is basically for people who stay invested for a long time to see their money become four times.

Similarly, the rule of 114 will tell you how fast your money will triple. In this case, you need to divide 114 by the annual rate of return. For instance, you invest Rs 1 lakh in an instrument that earns 12% return per annum. If you divide 114 by 12, you will see that it will take 9.5 years to triple your investment.

After the rule of 72 comes the rule of 114 which tells an investor how long will it take for their money to triple itself. Going by the same example of mutual funds with an annual return of 14%, the time it is going to take to triple your money would be (114/ 14) = 8.14 years. The final rule in line is the rule of 144.

Rule of 144 tells you how much time will it take for your amount deposited in a scheme to quadruple. Suppose you are investing in a scheme which is giving interest at the rate of 6 per cent, then 144/6 = 24, i.e., your amount will become four times in 24 years.

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 144 provides an exemption and permits the public resale of restricted or control securities if a number of conditions are met, including how long the securities are held, the way in which they are sold, and the amount that can be sold at any one time.

Rule 144 provides an exemption from registration requirements for the sale of securities through the public markets if a number of specific conditions are met. The regulation applies to all types of sellers, in addition to issuers of securities, underwriters, and dealers.

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.

How does the Rule of 72 work? ›

The Rule of 72 is a calculation that estimates the number of years it takes to double your money at a specified rate of return. If, for example, your account earns 4 percent, divide 72 by 4 to get the number of years it will take for your money to double. In this case, 18 years.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

The 10-5-3 rule is a general guideline for investing, suggesting an allocation of 10% of your portfolio in cash, 5% in bonds, and 3% in commodities.

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 (1.10^7.3 = 2). The Rule of 72 is reasonably accurate for low rates of return.

Hence, the doubling time is simply 70 divided by the constant annual growth rate. For instance, consider a quantity that grows consistently at 5% annually. According to the Rule of 70, it will take 14 years (70/5) for the quantity to double.

When dealing with rates outside this range, the rule can be adjusted by adding or subtracting 1 from 72 for every 3 points the interest rate diverges from the 8% threshold. For example, the rate of 11% annual compounding interest is 3 percentage points higher than 8%.

The Rule of 72 is a calculation that estimates the number of years it takes to double your money at a specified rate of return. If, for example, your account earns 4 percent, divide 72 by 4 to get the number of years it will take for your money to double. In this case, 18 years.

When you compare the two lists of factors, you can see that the common factor(s) are 1, 2, 3, 4, 6, 8, 9, 12, 18, 24, 36, 72. Since 72 is the largest of these common factors, the GCF of 72 and 144 would be 72.

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.