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Power of Compounding - Rule of 72 and 114 to Double & Triple Your Money - YouTube
Channel: Asset Yogi
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Friends, we have talked about the power of compounding in many videos.
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In fact, compounding is also called the eighth wonder of the world.
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And why is it said so? The logic is very simple
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We have discussed it earlier
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Assume we have invested 100 Rs anywhere
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And we earned 10% returns on them. So after a year, the amount will be 110 Rs
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So neither we will withdraw that 100 Rs nor the interest of 10 Rs
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So our capital for the next year will be 110 Rs
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We will again earn 10% returns on that. So our amount will become 121 Rs
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Again, we will invest 121 Rs and again earn the returns of 10%
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So our amount will be 133 Rs
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In this way, our capital increases, and the returns on that also multiplies.
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So finally in the long term when we see our corpus
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Then we have accumulated a huge lump sum amount.
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I did quite a detailed video on this
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If a person invests 10000 Rs a month
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And if he is 25 years old on today's date.
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So he will get 15 crores at the age of 60 years
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If you haven't seen that video then you must see it.
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And these are not unrealistic figures
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I have assumed only 15% returns here
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You can earn a 15% return in the stock market, mutual funds, etc
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I will provide you the links to many financial investments options
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You can check them out in the description box
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But the question that arises here is that
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Whenever we get an option for investment
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Assume we are expecting that we will get 11% returns 12% returns
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Or we get only 6% returns on FD
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So we want to know in how much time my money will be doubled?
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Or in how much time it will be tripled.
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We don't want to open Excel again and again for this
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If somebody has brought you a proposal
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Then you will not do the calculation in Excel in front of him
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And the calculation of compounding
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Is quite difficult to do with the help of a calculator also
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For this, we can do some calculations in our minds very fast
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I will discuss two formulas in this video.
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They will be very helpful.
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Stay tuned.
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To watch the latest finance video, subscribe to the channel
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And press the bell icon and click on the all button
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So that you will get the notification of the latest video
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Friends, if you want to learn about the stock market or investment
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So we have made many playlists. Master investor series for the stock market
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Mutual Funds series, real estate series, bonds series.
You'll find all the links in the description.
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Other than that, you will also get the important investment-related links in the description
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So assume you are evaluating a financial product
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Whether you are doing it online or any financial advisor has come to you
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And you want to know in much time and according to how much returns
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My money will be doubled. So for this, there is a very easy rule
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Rule number 72. So whatever your returns of investment are
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Divide 72 by it. So assume you are evaluating a fixed deposit
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And you get the annual returns of 6% there
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So, 72梅6=12
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This means, in 12 years, your money will be doubled.
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On the other hand, if you are evaluating a mutual fund type of investment
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So what will you do there?
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You will do 72梅12. We get an average return of 12 to 13% on mutual funds
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So we did 72梅12, then our money will be doubled in 6 years.
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So as compared to the FD, our money gets doubled in half time
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So assume you directly invest in stocks, you can expect better returns there.
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You can expect up to 15 to 20% returns
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So if you think that you can multiply the money according to the 20%
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So what will you do? You will do 72梅20
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The answer is 3.6 years
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This means your money is getting doubled in approx 3.5 years.
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Imagine you are doubling the money every 3.5 years
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So in 7 years, your money will be 4 times
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If you do this in this way, and if you do it for 35 years
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Then you can imagine your money will become huge
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So this formula tells us in how much time our money will be doubled.
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So if we want to know in how much time our money will be tripled.
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For that, there is the Rule of 114. So if we take the example of FD
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Then what will we do? We will divide 114 by 6%
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So, 114梅6= 19 years
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This means our money will be tripled in 19 years
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We will use the example of a mutual fund. If we do 114梅12
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This means, in 9.5 years, our money will be tripled.
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We will talk about the stocks assuming we will earn the returns of 20%
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So we will divide 114 by 20
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So 5.7 years. This means in approx 6 years, your money will be tripled
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So in this way, we can evaluate any financial investment.
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It takes hardly a two-second formula
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I am sure it will be very useful for you.
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If you liked the video, then like and share
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With your friends and family members
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These short formulas are very useful for us in our daily lives
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If you have any suggestions related to the video or the channel
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Then you can comment below.
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And if you haven't subscribed to the channel yet then subscribe
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And press the bell icon. So that you will get the notification of the latest finance video.
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So let's meet in the next informative video
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Till then keep learning, keep earning
And be happy as always.
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