We sometimes deposit our money in banks or post offices to get it double after a certain period – say six years, seven years and so on. The rate of interest used to be 10 percent or more, but it came down gradually to 6 or even less in recent times. In the scenario of ever changing interest rates we do not know for sure for how long we must place our money in fixed deposits to make it double. Should we consult the brochures or the employees there every time for this information like the illiterates do? No need. one of my friends shared a tip with me to calculate this quickly with the help of a simple formula. He called it` Formula 72`.
For example you are depositing 10,000 rupees somewhere at an annual interest rate of 6 percent. How soon will you get 20,000 back? Apply formula 72 to know it. Divide 72 with the rate of interest(that is 6). You will get 12. So you need to wait for twelve years to double your amount. If the interest is 7 percent, then it will be 10.2 years. Like wise at 8 percent – deposit period is 9 years; 9 percent – it is 8 years. That`s it!
Dantuluri Kishore Varma
Delightful Blog 