Want to double your retirement fund? Find out in a jiffy how many years it will take for your money to double using the 'Rule of 72'..

Everyone wants their retirement to be completely secure and to avoid any financial crunch in their old age. To achieve this, people invest a portion of their earnings in various avenues. However, the very first question that arises when starting an investment is: "How long will it take for my money to double?"

If you are planning to grow your retirement fund, you do not need a financial expert or a complex calculator to figure this out. There is a very simple and popular formula in the world of finance known as the 'Rule of 72'.

What is the 'Rule of 72'?
The 'Rule of 72' is a mathematical formula that allows you to easily determine how many years it will take for your investment to double at a specific interest rate, thanks to the power of compounding.

How does this formula work?
The math behind it is very simple. You simply need to divide the number 72 by the estimated annual interest rate you are earning on your investment. The result of this division indicates approximately how many years it will take for your investment to double.

Formula: 72 ÷ Annual Interest Rate = Years required for money to double

Let’s understand this through three different calculations (examples):
Suppose you have made a lump-sum investment of ₹5 lakh for your retirement. Now, let's see when this amount will grow to ₹10 lakh based on different rates of return:

1. Fixed Deposit (FD) or Safe Investment:
Suppose you have invested this money in an FD or a secure scheme offering an annual interest rate of 7%.

Calculation: 72 ÷ 7 = 10.28 years
Result: At a rate of 7%, it will take approximately 10 years and 3 months for your ₹5 lakh to grow into ₹10 lakh.

2. Schemes like Debt Funds or PPF:
If you invest in an instrument that offers an annual return of approximately 8%.

Calculation: 72 ÷ 8 = 9 years
Result: Your money will double in exactly 9 years.

3. Equity or Mutual Funds:
If you are willing to take some risk and invest in equity-based mutual funds, you can expect an average annual return of 12% over the long term.

Calculation: 72 ÷ 12 = 6 years
Result: In this scenario, your retirement fund will double to ₹10 lakh in just 6 years.

How is this formula helpful in retirement planning?
If you know that you have 15 or 20 years left until retirement, the 'Rule of 72' allows you to calculate the rate of return required from an asset class to reach your target corpus.

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