What is the Rule of 72?
The formula is straightforward:
Time to Double = 72 ÷ Annual Rate of Return
For example, if your investment earns 8% annually, it will take roughly 9 years (72 ÷ 8) to double. This quick mental math makes it easier to set realistic expectations and plan long-term goals.
Why It Matters for Investors
The Rule of 72 isn’t just a neat trick—it’s a practical tool for comparing investment options. Whether you’re considering fixed deposits, mutual funds, or ETFs, this rule gives you a clear picture of growth potential.
Applying It to Nifty ETF Funds
If you invest in Nifty ETF funds, which track the Nifty 50 index, historical returns have averaged around 10–12% annually over the long term. Using the Rule of 72:
- At 10%, your money doubles in about 7.2 years.
- At 12%, it doubles in 6 years.
This illustrates why Nifty ETFs are popular among investors—they combine diversification with relatively strong growth prospects, making them ideal for long-term wealth creation.
Limitations of the Rule
While useful, the Rule of 72 assumes a constant rate of return, which isn’t always realistic in volatile markets. It’s best used as a rough estimate rather than a precise calculation.
Bottom Line: The Rule of 72 is a simple yet powerful way to visualize compounding. Pair it with disciplined investing in options like Nifty ETF funds, and you’ll be well on your way to achieving your financial goals.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.