Power of compounding: How long will it take for Rs 5 lakh to turn into Rs 20 lakh? Check out it with this investment rule

The Rule of 144 helps estimate how long it will take for Rs 5 lakh to grow into Rs 20 lakh, leveraging the power of compounding, regular contributions and long-term investment discipline.

ZeeBiz WebTeam | Jan 28, 2025, 05:42 PM IST

Turning Rs 5 lakh into Rs 20 lakh may seem like a daunting task, but with the power of compounding and strategic investment, it’s achievable. The Rule of 144 is a simple formula that can help you estimate how long it will take for your investment to quadruple based on annual returns. By staying disciplined, making regular contributions, and focusing on long-term goals, you can accelerate the growth of your investment and reduce the impact of market volatility.

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Understanding the Power of Compounding

Understanding the Power of Compounding

Compounding allows your initial investment to grow exponentially by earning interest on both the principal and accumulated interest.

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The Importance of Long-Term Investment

The Importance of Long-Term Investment

Over time, compound interest accelerates the growth of your investment, helping you achieve your financial goals.

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Using the Rule of 144

Using the Rule of 144

The Rule of 144 estimates how long it will take for your investment to quadruple based on the annual return rate.

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Formula for Time Calculation

Formula for Time Calculation

The formula is: Years to Quadruple = 144 ÷ Annual Return Rate (%).

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How Your Rs 5 Lakh Can Turn into Rs 20 Lakh

How Your Rs 5 Lakh Can Turn into Rs 20 Lakh

By applying the Rule of 144, you can estimate how long it will take for your investment to quadruple. The formula, Years to Quadruple = 144 ÷ Annual Return Rate (%), highlights the impact of higher returns and consistent contributions. For instance, with a 12% annual return, your Rs 5 lakh could grow to Rs 20 lakh in approximately 12 years. Patience, discipline, and leveraging compounding are essential to achieving this financial milestone.

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Impact of Higher Returns

Impact of Higher Returns

The higher your annual return rate, the quicker Rs 5 lakh will turn into Rs 20 lakh, thanks to the power of compounding.

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Patience is Key

Patience is Key

Achieving a high return rate may seem ambitious, but patience and long-term investing are crucial to reaching your goal.

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Regular Contributions Enhance Growth

Regular Contributions Enhance Growth

Consistent contributions (like through SIPs) can boost your investment’s growth, helping you meet your target faster.

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Risk and Market Volatility

Risk and Market Volatility

While market fluctuations can affect returns, long-term compounding tends to reduce the impact of short-term volatility.

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Stay Disciplined and Focused on Your Goal

Stay Disciplined and Focused on Your Goal

Maintaining a disciplined investment approach, along with regular contributions, helps ensure steady progress toward your financial objectives.

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