Rules of 72, 114 and 144

Conservative estimates of 1% per year for returns of my investments are really very conservative. I am sure they are not realistic, in a good way.

After maxing out all tax advantaged options I will have to start taxed investment accounts.


It is interesting to make some estimates for different rates of return, which are more realistic than 1%.

I found some "rules"  for quick estimates of approximate calculations.

Rule of 72

1) Estimate of time to double your money based on growth rate.
Example:
Expected growth rate: 10% per year
Time to double your money: 72/10=7.2 years.

2) Estimate of needed growth rate for purpose of doubling your money
Example:
Targeted time for doubling money: 5 years
Needed yearly growth rate: 72/5=14.4%


Rule of 114  

1) Estimate of time to triple your money based on growth rate.
Example:
Expected growth rate: 10% per year
Time to triple your money: 114/10=11.4 years.

2) Estimate of needed growth rate for purpose of tripling your money
Example:
Targeted time for tripling money: 5 years
Needed yearly growth rate: 114/5=22.8%


Rule of 144  

1) Estimate of time to quadruple your money based on growth rate.
Example:
Expected growth rate: 10% per year
Time to quadruple your money: 144/10=14.4 years.

2) Estimate of needed growth rate for purpose of quadrupling your money.
Example:
Targeted time for quadrupling money: 5 years
Needed yearly growth rate: 144/5=28.8%


Using those rules I see that with my very conservative estimates of 1% growth I will not go far.

My own conservative example:
Growth rate 1%
Time to double the money: 72/1=72 years, very long time.
If I can get at least 5% yearly growth in my "challenge" account that will double the money in 14.4 years.