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When it comes to investing, consumers frequently use the stock markets, mutual funds, government bonds, banks, and post offices. The majority of individuals desire to make a secure investment with certain profits. But in reality, you need to calculate where and how long it will take for your money to double, triple, or quadruple before investing anyplace. Rule of 72 might be quite helpful for you in this case.
Understand the Rule of 72 The Rule of 72 is seen as being highly essential from an investing standpoint. Most experts believe that this is an exact formula that determines how many days it will take for your investment to double. You must divide the interest by 72 to determine how much interest you will receive yearly in a plan. This tells you how long it will take for your money to double.
Learn through examples.
You may have seen that many people continue to leave their deposits in their bank accounts because they think they will continue to collect yearly interest. However, the interest rate on the savings account is merely 4%. If we divide 72 by 4, the result is 18, meaning that your money will have doubled in 18 years. On the other hand, the interest rate on fixed deposits ranges from 5 to 6 percent. The 10-year fixed deposit offered by State Bank of India pays an interest rate of 5.40%. In this case, your money will double in 72/5.40=13.33 years, or in 13.33 years.
The best scheme will be easy to select if you use this method to determine which scheme is ideal for you. As was seen in the example, a fixed deposit is preferable than a savings account. Similar to this, use this method to compare any other plan you are investing in to other schemes. This will help you choose which plan will double your money in the shortest amount of time. This rule often provides a value that is almost correct. But the outcome can alter just a little bit.
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