Power of Compounding: From Rs 20 lakh investment to Rs 40 lakh corpus in 6 years! What should be your return to achieve this goal?
Discover how Rs 20 lakh can grow into Rs 40 lakh using the Rule of 72. Learn the calculation process, estimate time with varying returns, and unlock your investment growth potential.
The journey of transforming Rs 20 lakh into Rs 40 lakh begins with understanding the Rule of 72, a powerful tool to estimate investment growth over time. Whether you're planning for long-term wealth creation or assessing short-term financial goals, knowing how long it takes for your money to double is crucial. This article breaks down the calculation process, explores different return rates, and provides actionable insights to help you strategize smarter investments for faster financial growth. Achieve your corpus goals effectively with compounding power!
(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning)
What Should Be Your Return to Achieve This Goal?
Compounding as a Wealth-Building Tool
- Key to Growing Wealth
- Compounding accelerates wealth growth with systematic and regular investments.
10% of your monthly income
- Starting with even 10% of your monthly income and increasing it by 5% annually builds a significant corpus.
Understanding the Rule of 72
- A simple financial tool to estimate the time needed to double an investment at a given annual return.
Formula
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Formula for the Rule of 72
- T≈R72
Formula for the Rule of 72
- T≈R72
Formula explained
- Where:
- T = Time (in years, months, or days, depending on rate presentation)
- R = Annual return (in percentage)
- Divide 72 by the return rate to get the doubling time.
- T = Time (in years, months, or days, depending on rate presentation)
- R = Annual return (in percentage)
Rs 20 lakh to Rs 40 lakh
So, at an annual interest rate of 12%, it will take approximately 6 years for an investment of Rs 20 lakh to grow to Rs 40 lakh.
Benefits
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Helps understand how inflation or returns impact your money.
Helps understand how inflation or returns impact your money.
Disclaimer
Works best for interest rates around 8%; deviations may reduce accuracy.