If you have one lakh Rupees with you do you know when the amount will be double?. Have you heard about the rule of 72. This number 72 will expect little you when the investment will be double. The most important point is this rule of 72 will predict the number time and compound interest and not for simple interest.

Suppose you have invested 100000 rupee in a investment scheme bharat the interest credited will be 8:00 % annually. Then divide 72 by 8 will will give you a value of 9. By this we can come to conclusion that it takes nine years to make the amount one lakh rupees invested in a scheme into two lakhs.

Same way if you invested 1 lakh rupee in bank fixed deposit and interest credited at 6% compounded annually then by dividing 72 by 6 gives you 12. so in 12 years the amount will be doubled from 1 lakh to 2 lakh. So before investing you can check by rule of 72 to know by when the amount will be doubled.

This number 72 will give only the approximate value of years. The number 69.3 will give the more accurate value of years. but due to difficulty in dividing the number 69.3 we are using 72 to make easy for calculating. And once again remember that simple interest does not work well with the rule of 72.

Eventhough there are many complicated formuals are there to know the exact year most people use this rule 72 to beacuse of its ease to use. This is like shortcut to know the time period to double. This rule can be used to calculate population, charges, loan and anything that is compounding. suppose consider our GDP is expected to grow 6% annually then our economy will be double in 12 years.

people love money and they love to know when the amount will grow in double. By using this rule 72 they can roughly estimate the time period and prefer the investment scheme according to their need. compounding interest is the eighth wonder people who knows this will work smartly with money. Financial literacy is much needed to be financially free and which gives us the time freedom. Now a days those who is having big house or costly car is not considered as luxury. The people who is having their time freedom is considered as luxury. This rule of 72 will allow you to plan accordingly.