Formulating the Doubling, Tripling, and Quadrupling of Trading Capital

The Rule of 72 is a simple way to estimate how long it will take to double your investment. The only thing you need to know is the average annual rate of return.

📌 Key Points

• The Rule of 72 determines how long it will take for an investment to double based on a fixed annual rate

• The only calculation required is to divide the number 72 by the annual rate of return

• For example, at a rate of return of 10% per annum, the initial investment doubles in just over seven years

• Correspondingly, there are also Rules 115 and 144 for the calculation of how long it will take to triple and quadruple your initial investment

 

 Using the Rule of 72

To estimate how many years it will take to double your investment, simply divide 72 by the annual rate of return.

🧮 72 / Annual Return = Years of investment doubling

Examples

For example, if an investment is expected to return an average of 4% per year, it will take 18 years to double the initial capital.

■ 72 / 4% = 18 years

Whereas, if an investment is expected to return an average of 12% per year, it will take 6 years to double the initial capital.

■ 72 / 12% = 6 years

The table below shows how many years it will take to double the initial investment, based on different annual rates of return:

Annual Return	Years for Doubling	Annual Return	Years for Doubling
1%	72	10%	7.20
2%	36	15%	4.80
5%	14.4	20%	3.60
6%	12	25%	2.88
7%	10.3	30%	2.40
8%	9	35%	2.06
9%	8	40%	1.80

👉 If you earn 10% per year on an investment, your capital will double every seven years or so.

 

Reversing the Rule of 72

By reversing the Rule of 72, you can calculate how much to invest and the required annual rate of return to reach a specific financial goal.

Example

For example, if you are 35 years old with €100,000 and want to grow it to €800,000 by age 50 (in 15 years):

■ Goal: Turn €100,000 into €800,000 in 15 years

■ At a 14.4% annual return, your money doubles every 5 years

■ Therefore, with a 14.4% annual return, €100,000 will grow to €800,000 in 15 years

You would need to earn 14.4% per year to reach this financial goal.

 

 

 The Rule of 115 - Tripling Investment Capital

To estimate how long it will take to triple an investment, you can use the Rule of 115.

Divide 115 by the investment’s annual rate of return to calculate the number of years required.

🧮 115 / Annual Return = Years Required for Trippling

For example, if an investment returns an average of 10% annually, it will take approximately 11.5 years to triple the initial capital.

■ 115 / 10% = 11.5 years

 

 The Rule of 144 – Quadrupling Investment Capital

To estimate how long it will take to quadruple an investment, you can use the Rule of 144.

Divide 144 by the annual rate of return to calculate the number of years needed to quadruple your investment.

🧮 144 / Annual Return = Quadrupling Years

For example, if an investment returns an average of 10% annually, it will take approximately 14.4 years to triple the initial capital.

■ 144 / 10% = 14.4 years

 

■ The Rule of 72, 115, 144

G.P. for TradingCenter.org (c)