Rule of 72

A friend asked me over chai how long his money takes to double.

Not what return he should chase. Not which fund. Just, when does it turn into twice as much. It is the best question I have heard in a while, because doubling is the one thing about compounding your brain can actually picture. A percent slides right past you. "Twice as much" does not.

So I gave him the shortcut I run in my head. 72 divided by your return is roughly the years to double. At 12 percent, money doubles every 6 years. At 8, every 9. At 6, every 12.

Then we did the part that matters. Take Rs 10 lakh and leave it for thirty years. At 12 percent it becomes about Rs 3 crore. At 8, about Rs 1 crore. At 6, roughly Rs 57 lakh. Same money, same three decades.

Look at what that gap actually is. 12 percent buys you five doublings in thirty years. 8 percent buys just over three. The four points between them do not trim a little off the end, they delete close to two doublings, and the last doubling is always the biggest one you ever get.

Here is what made him put the cup down. Shave 12 down to 11, a fee you never notice, one lazy fund, a single panic exit, and about Rs 71 lakh quietly walks off that same ten lakh over thirty years. You did not lose one percent. You lost nearly a quarter of the whole pile.

That is the whole lesson for me. Nobody can hand you a higher market. But the rate you actually keep, after costs, after tax, after your own nerves, decides how many times your money doubles. Count in doublings and investing gets a lot simpler.

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