I learn something new every day! I had heard of, and have used extensively, the Rule of 72. But I had never heard of the Rules of 114 and 144. They're used in the same way as the Rule of 72, only instead of estimating how long it will take to double your money, they are used for estimating how long it will take to triple (Rule of 114) and quadruple (Rule of 144) your money, assuming a given interest rate.
For example, to double your money at an assumed 8% rate of return, you take 72 divide by 8, and your result is 9 years to double your money.
To triple your money at that same rate of return, you take 114, divide by 8, and your results is 14 1/4 years. Alternatively, to quadruple your money at the same 8 percent per year rate of return, take 144, divide by 8, and get 18 years.
These are two additional tools you can use to quickly determine how fast your money can grow to triple or quadruple itself.
Plug for Dax Desai's site: I just found this one today and I really like it. Lots of numbers-based advice. It's more for the active investor, but there is a lot of "every man" information here.
Time Value of Money: The Rule of 72, 114, 144
Be sure to check out the development of my free eBook, "Stock Investing Basics."
Want to learn how to sell anything online? Here's how.
Subscribe to:
Post Comments (Atom)
The Rule of 144 is pretty useless; it's just the Rule of 72 applied twice. Why remember 2 rules when 1 will do?
So true, Lily! Duh. Thanks for pointing this out to me :)
Bill, that's good information but you've got a typo up there. Change that second "triple" to "quadruple" for the 144 rule.
"To triple your money at that same rate of return, you take 114, divide by 8, and your results is 14 1/4 years. Alternatively, to triple your money at the same 8 percent per year rate of return, take 144, divide by 8, and get 18 years."
@pat m: Thanks, post has been corrected. I should really think about reading my posts after I type them!!! :)