Time needed to double and triple your money!

The Rule of 72 and the Rule of 114 are simple, practical tools used to estimate how long it takes for your investment to grow by compounding.

Rule of 72 — Doubling Your Money

The Rule of 72 estimates how many years it will take for an investment to double at a fixed annual rate of return. You calculate it by dividing 72 by the annual return percentage. For example, if an investment yields 12% per year, it will roughly double in 6 years (72 ÷ 12 = 6). This rule provides a quick way to understand the growth potential of various investments without complex calculations.

Rule of 114 — Tripling Your Money

The Rule of 114 works similarly but estimates the time required to triple your investment. You divide 114 by the annual return rate to get the approximate years to triple. For instance, with a 10% return, your money would take about 11.4 years to grow three times its value (114 ÷ 10 = 11.4). This rule is useful for longer-term goals where tripling your capital is the target.

How These Rules Work and When to Use Them

Both rules are based on the compound interest formula and provide fast mental math shortcuts. They assume a steady rate of return compounded annually and work best with moderate returns between roughly 6% and 15%. They don't consider fluctuations, taxes, or inflation but are very handy for initial planning and setting expectations.

Practical Applications in Financial Planning

These rules help investors decide if an investment's growth rate aligns with their goals, such as retirement savings, education funds, or wealth-building strategies. They can also reverse the formulas to find the required rate of return to double or triple money in a desired timeframe—for example, needing about 11.4% per year to triple an investment in 10 years.

Using these rules gives you a quick, rough estimate to plan investments and understand the power of compounding without complicated math. They are especially helpful for comparing investment options and setting realistic financial goals.