Rule of 114: In how many years will your Rs 6,00,000 one-time investment turn into Rs 18,00,000? Know through this formula

The concept of compounding has long been a trusted strategy for growing wealth. By earning returns on both the initial principal and accumulated interest, compounding enables exponential growth over time. This article explores the Rule of 114, a simple formula that reveals how many years it will take for your investment to triple, with a focus on an example where Rs 6,00,000 grows into Rs 18,00,000.

What is the Rule of 114?

The Rule of 114 is an easy-to-use formula that calculates the time required for an investment to triple at a given annual return rate. It provides a quick estimate without the need for complex calculations.

Formula for Rule of 114 

Tripling Time = 114 ÷ Expected Annual Rate of Return

How to use the Rule of 114: A step-by-step guide

• Determine Your Annual Return Rate: Identify the expected annual return from your investment.
• Divide 114 by the Rate: Use the formula to calculate the years required to triple your money.
• Interpret the Result: The output gives the approximate number of years for tripling.

Also Read: Power of compounding: How long will it take for Rs 5 lakh to turn into Rs 20 lakh? Check out it with this investment rule

Why higher returns lead to faster growth with compounding formula

• The time required to triple your investment is inversely proportional to the return rate. Let’s explore examples to understand this better:

Investment Formula: Examples

At a 10% Return Rate:

• Tripling Time = 114 ÷ 10 = 11.4 years
• Rs 6,00,000 will grow to Rs 18,00,000 in 11.4 years.

At a 12% Return Rate:

• Tripling Time = 114 ÷ 12 = 9.5 years
• Rs 6,00,000 will grow to Rs 18,00,000 in 9.5 years.

At a 15% Return Rate:

• Tripling Time = 114 ÷ 15 = 7.6 years
• Rs 6,00,000 will grow to Rs 18,00,000 in 7.6 years.

Also Read: Gratuity Calculation: What will be your gratuity on Rs 45,000 last-drawn basic salary for 6 years & 9 months of service?

The role of compounding in wealth building

Compounding accelerates your wealth by generating returns on accumulated earnings. This means starting early and reinvesting your profits can significantly enhance the growth of your investment.

Investment Rule: How to maximise returns with strategic planning

• Choose High-Return Investment Options: Opt for equity mutual funds, stocks, or other high-growth avenues.
• Reinvest Earnings: Allow your money to compound uninterrupted for optimal results.
• Start Early: The sooner you invest, the more time compounding has to work its magic.

Simplify financial planning with the Rule of 114

• Using straightforward formulas like the Rule of 114 can help you set realistic financial goals and understand the impact of compounding. It’s an invaluable tool for creating effective investment strategies.
• By leveraging the Rule of 114, you can chart a clear path to tripling your investments, like turning Rs 6,00,000 into Rs 18,00,000, while gaining a deeper appreciation for the power of compounding.