# How Long Will It Take To Become A Millionaire calculator

This investing rules you should know by heart.

There are some financial rules of thumb that are valid forever.

Combined with solid investments, these rules will hold you on an investing strong path.

We can separate those rules into two groups.

One will show you how fast will your money grow and the other, how fast will your investment decrease.

So, let’s see how the first group of rules work

### How fast will your money raise

#### Rule of 72 (double)

Many of you already have some knowledge of the Rule of 72, but let’s review again. To determine the time it will take to double your money, divide 72 by the expected growth rate, formulated as a percentage.

This will tell you how much time will pass until your money will double. Divide 72 by the interest rate at which you are compounding your money. You will see the number of years it will take to double in value.

If the interest rate is 9% then your money will double in 9 years

### 72/8=9

You can use this rule to quickly estimate the doubling or halving time through compound interest or inflation, respectively.

For example, using the rule of 72, an investor who invests \$1,000 at an interest rate of 8% per year, will double their money in approximately 9 years.

or

### 72/8 = 9

Using the same rule of 72, an investor who invests \$1000 with an annual inflation rate of 2% will lose half of their investment in 36 years.

### 72 / 2 = 36

The rule of 72 can also be used to determine the long term effects of period fees on an investment, such as mutual funds, life insurance, and private equity funds.

For example, without counting any appreciation of the underlying investments in the fund, a mutual fund with a 3% annual loading and expense fee will cut the original amount of investment in half over 24 years.

### 72/ 3 = 24

The rule of 72 is just an estimation. It is not quite exact.  Indeed, the rule of 72 is led by the rule of 70 and the rule of 69 which are practiced the same way but are more specific for more modest periodic interest rates. The rule of 72 is popular because of its ability to be divided with more numbers.

#### The Rules of 114 and 144

The Rules of 114 and 144 launch the Rule of 72 straight to a higher level.

Use rule 114 to predict how long it will take to triple your cash. It works the same way as the rule of 72.

You should divide 114 by interest rate to identify how many years your \$10,000 will need to become \$30,000.

Rule of 114 can be used to discover how long it will take an investment to triple, and the Rule of 144 will show you how long it will take an investment to quadruple.

For example, at 10% investment will triple in about 11 years (114 / 10) and quadruple in about 14.5 years (144 /10).

Hence, rule 144 tells you how much time your investment will quadruple in amount. For instance, the interest rate is 12%. Your \$10,000 will become \$40,000 in 12 years.

These rules give only an incomplete view. The exact number after compounding may alter.

There is an important attachment to the Rules of 72, 114 and 144.

Can you see that the numbers don’t double?

While it takes the interest rate divided into 72 to double, the interest rate divided into 144 quadruples!

That’s the influence of compounding. The message of this story is: start to save early and try to save often.

#### The Rules of 1.5 and 1,080,000

Let’s estimate how long it will take you to become a millionaire.

We will start with the Rule of 1.5, likewise recognized as Felix’s Corollary.

This rule says that for a flow of investments where the number of years times the interest equals 72, the final value will equal approximately 1.5 times the amount invested.

Say, investing \$10,000 per year for 8 years at 9% interest.

### 8 x 9 = 72

the value of the investments at the end of year 8 will be about \$120,000

Or we can make it simpler

### \$10,000 x 8 x 1.5 = \$120,000

We can now use this data to create a How Long Will It Take To Become A Millionaire calculator.

#### The Rule of 1,080,000.

We will use Felix’s Corollary again. All we need to do is decide how long it will take you to save \$720,000 at a contracted interest rate.

To explain why \$720,000. Because \$720,000 times 1.5 equals \$1,080,000. This describes why we didn’t use \$1,000,000.

This is easier than it looks, you will see.

Say, with a saving of \$90,000 per year you will need 8 years to acquire \$720,000.

And at 9% annual interest, you would save \$1,080,000 over 8 years. Of course, most of you don’t have \$90,000 per year to put on savings.

That’s why most of us are not able to collect a million dollars in 8 years.

So let’s expand it to 16 years.

#### Now, what do we lack to be a millionaire?

Again implementing a 9% rate of return? Yes! Here is where the rule 72 again in the scene. Using the Rule of 72, we know that whatever we have saved over the first 8 years will double over the next 8 years because 72 divided by our interest rate of 9% equals 8.

So we can break the 16 year savings period into 3 equal portions:

1) the amount we save over the first 8 years;
2) the doubling of this amount over the next 8 years;
3) the amount we save the second 8 years.

And here it is: \$720,000 divided by 3 equals \$240,000. That is the amount we need to save each of the two 8 year periods. That is \$30,000 per year if my math is good. And it is, so you just follow the rest of this. That means \$2,500 per month, which is a reasonable saving for some people.

But you want to determine what it will take to be a millionaire in 24 years. All you have to do is just divide \$720,000 by 7 and then again by 8.

So, \$720,000 divided by 8 equals 90,000 divided by 7 equals about \$12,800. Right? Hence, investing just a bit over \$1,000 per month at 9% interest during 24 years period will make you a millionaire.

### How fast will your investment reduce?

#### Rule of 70

This is a helpful rule for foretelling your future buying potential. Divide 70 by current inflation rate to know how fast the value of your investment will get decreased to half its present value. This is particularly helpful for retirement planning because it influences the way you set up your monthly withdrawals. Still, do remember that the inflation rate varies from time to time.

The inflation rate of 7% will lessen the value of your money to half in 10 years.

#### Rules of 71 and 69.3

These rules are for math geeks. They do the same thing as the Rule of 72 but are considered more accurate depending on the interest rate and compounding period. For example continuous, daily, annually.

The rule of 71 is the most accurate when dealing with annual compounding. And the rule of 69.3 is more accurate for continuous or daily compounding. The Rule of 70 comes in because who wants to divide an interest rate into a number like 69.3

Of course, you don’t want to invest your money just anywhere. You need to be smart about what you invest in so you can grow your wealth and become financially free.

The five main investing thumb rules are:

1) Invest as early as possible and as much as you can
2) Take calculated risks
3) Don’t invest money you’ll need right away
4) Don’t invest in anything you don’t understand

### THE OTHER RULES

#### The 10, 5, 3 rule

This is a neat little rule that states that you can expect returns of 10% from equities, 5% from bonds and 3% on liquid cash and cash-like accounts.

#### The emergency fund rule

Put away at least 3-6 months’ worth of expenses in liquid savings account to ensure it is available at short notice.

#### 100 minus your age rule

This rule is used for asset allocation. Subtract your age from 100 to find how much of your portfolio should be allocated to equities

#### Pay yourself first rule

Right from your first salary, put away a little for your retirement. Experts say 10% of your income should go into this. It is important to raise the amount as your income rises over the years.

#### 4% withdrawal rule

How much money should you withdraw after retirement? Use the 4% rule to ensure that your investment survives.

Investing doesn’t have to be difficult if you start early, understand investment opportunities, and invest in different assets to minimize risk.

By following these investment rules, you can invest a lot in the proper assets and maximize the odds you’ll end up with a nice profit.

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