Investment Growth: Understanding the 8:4:3, 114, and rule of 72 for mutual fund investments

• The 8:4:3 rule helps visualise how your mutual fund investments grow over time through compounding.
• It states that with a 12% annual return, your investment doubles every 8 years, then again in 4 years, and a final time in 3 years.

• Compounding allows your investment to grow exponentially by earning interest on both your principal and accumulated interest.
• For example, an investment of Rs 100 at 10% annual interest grows to Rs 121 after two years, continuing to multiply annually.

• The Rule of 72 estimates how long it will take for your investment to double.
• Simply divide 72 by the annual interest rate. For example, at a 10% rate, your investment will double in about 7.2 years.

• Rule of 114: Divide 114 by the interest rate to estimate when your investment will triple. At 8%, this takes about 14.25 years.
• Rule of 144: To estimate when it will quadruple, divide 144 by the rate. At 8%, your investment quadruples in about 18 years.

Start early to maximise the benefits of compounding. For example, investing ₹5,000 monthly at 10% from age 25 can grow into over Rs 1 crore by age 60.

New rules include mandatory nominations, linking PAN and Aadhaar, and revalidating KYC. These updates improve security and efficiency in mutual fund investments.

• Disciplined Investing: Encourages long-term stability and helps avoid impulsive decisions during market fluctuations.
• Inflation Protection: Ensures your investments align with inflation, maintaining their real value over time.

The 8:4:3 rule encourages regular portfolio reviews, helping investors adjust to market changes to minimise risks and maximise returns.