The question in everyone’s mind “I want to double or triple my money, how long it would take”? The answer to this question lies in the simple mathematical rules called “Rule of 72” and “Rule of 105”. The Rule of 72 simply means how long it takes for your money to double whereas Rule of 105 means how long it takes for your money to triple. In order to use the formula, you need to know the interest rate earnings per year from your investments and then divide it by 72 or 105. Let’s say for example, Sensex generally gives 12% returns on an average every year. So if you invest your money in sensex index funds, it will take 6 years estimated time to double your money and 9 years estimated time to triple your money.
Rule of 72, time for investment to double = 72/ rate of return
Rule of 105, time for investment to triple = 105/rate of return
Let’s take another example, you create a portfolio of selected equity stocks with sound management, good future prospect of the company as well as the industry and also macro economic factors are favoring and the estimated return on your investment is 36% per annum. Then it would take two years estimated time to double your money and three years to triple your money.