8-4-3 Rule: Accelerate your wealth growth with compounding

Ankur Gupta May 07,2024

Do you want to see your money flourish? The 8-4-3 rule unlocks the potential of compounding to turbocharge your savings.

What is the 8-4-3 Rule?

The 8-4-3 rule demonstrates how your investment accelerates with compounding. Here, 8 signifies eight years, 4 denotes four years, and 3 indicates three years.

With this strategy, investors can aim for an average return of 12% per annum on a specific investment amount for 8 years.

However, in the subsequent four years, totalling 12 years, your money will take only half that time to achieve the same 12% growth.

Likewise, after the subsequent period of three years, totalling 15 years, your initial investment will be doubled.

Tips to Maximise Growth Using This Strategy

Start Early: Initiate investments sooner to leverage compounding over a longer duration. Invest Regularly: Consistency is paramount. Consider SIPs (Systematic Investment Plans) for automated investing. Choose Wisely: Explore avenues like mutual funds that capitalise on compounding. Think Long-term: Equity investments often yield well over extended periods.

Tips to Maximise Growth Using This Strategy

Reinvest Profits: Avoid withdrawing gains. Instead, allow them to compound for optimal results. Diversify: Spread investments across various assets to mitigate risks. Stay Composed: Market fluctuations are commonplace. Focus on the big picture and long-term objectives.