Riya: Hey Shyam, I keep hearing about the “Rule of 72” when it comes to investing. What exactly is it?

Shyam: Great question, Riya! The Rule of 72 is a simple way to estimate how long it will take for your investment to double, based on a fixed annual rate of return.

Riya: Oh! How does it work?

Shyam: You just divide 72 by the annual return percentage. The result gives you the approximate number of years for your money to double.

Riya: Sounds interesting! Can you give me an example?

Shyam: Sure! Let’s say you invest in a mutual fund that gives you an annual return of 8%. Using the Rule of 72:
72 ÷ 8 = 9 years
So, your money will roughly double in 9 years.

Riya: That’s pretty cool! But what if I want to triple my money instead of just doubling it?

Shyam: Good thinking! For that, we use the Rule of 115.

Riya: Oh! How is it different from the Rule of 72?

Shyam: It works the same way but helps you estimate how long it will take for your money to triple. Instead of dividing by 72, you divide 115 by the annual return rate.

Riya: Got it! Can you show me an example?

Shyam: Of course! If your investment earns an 8% return annually:
115 ÷ 8 = 14.4 years
So, your money will roughly triple in about 14.4 years.

Riya: Wow! This makes it so easy to estimate growth. But does this work for all returns?

Shyam: It works best for returns between 6% and 12%. For very high or low returns, the estimates may not be as accurate, but it still gives you a quick way to gauge growth.

Riya: That’s super helpful, Shyam! Now, I can easily assess how long my investments might take to grow.

Shyam: Exactly! These rules help you make informed financial decisions without complex calculations.

Riya: Thanks, Shyam! Next time, I’ll impress my friends with these rules.

Shyam: Haha, go for it! Smart investing, Riya!