The question “when would my money double?” is a question that crosses every investor’s mind sooner or later. If you have also wondered about when you can double your money by investing in stocks or another investment avenue of your choice, you have come to the right place. As a matter of fact, you will be surprised to know how easy it is to estimate the doubling period of your investment.
That being said, let us introduce to you the rule of 72. The 72 Rule is used to estimate an investment’s doubling time given a fixed annual rate of return. Here’s the formula to utilize for the calculation:
Formula: Doubling time = 72/Interest rate
Example: If you have invested Rs.100,000 and are getting a profit rate of 25% p.a.
Then
72/25=2.88 ~3 years
Thus, you will double your investment in 3 years and will have Rs. 200,000.
Thus, you will double your investment in 3 years and will have Rs. 200,000.
The formula is pretty easy to understand and would take you only a few seconds to do your calculation based on the amount that you have invested or are planning to invest. Again, as mentioned earlier, it is not necessary that you invest in the stock market in order for this formula to work. Whichever investment avenue that promises you a fixed return, confirms that the rule of 72 will work for you.
It is important to mention here that in finance, there are also rule of 70 and the rule of 69.3 which are the methods for estimating an investment’s doubling time. So, it is up to you which formula you want to use to find out how long it will take for your investment to get doubled. You can also bookmark and use this automated calculator if you like: Rule of 72 Calculator
Pakistan Stock Exchange will soon be introducing a number of useful calculators to help you calculate various things as an investor. This will enable users to utilize official calculators by PSX instead of random calculators and tools from the web.