In a time deposit account, the interest rate ranges from 6.9% to 7.5% for a period of 1 to 5 years. - After SBI And Kotak Mahindra, PNB Raises Interest Rates On Fixed Deposits, Details Inside
The rule of 72 serves as a useful tool to estimate the time it takes for your investment to double, relying on the annual interest rate. While not a precise science, it provides a rapid and straightforward method to obtain a rough estimate in different situations.
To take control of your money and become wealthy, follow personal finance rules like the Rule of 72 for estimating investment doubling time, age-based asset allocation, and the 50-30-20 budgeting rule.
To understand the rule of 72 formula, you need to divide 72 by the expected annual rate of return. For example, say you invest Rs 1 lakh every year in an investment that earns 8% interest annually. Now if you divide 72 by 8, you will get 9 which gives you the number of years it will take for your money to double. So, your investment will grow to Rs 2 lakh in nine years.