Time and time again every investor faces question of allocating hardly earned cash. Obviously, his or her aim is to find an investment vehicle offering highest possible per annum return at an acceptable risk.

However, how many investors than go on and calculates how long does it take, at any given compounded rate of return, for his investment to double, triple or quadruple in value?

I looked around for some answers to this and here is the table I found most useful:

Rule 72
Of course in real life you don’t always have similar table ready at hand when you need most. In such cases you can use another well known tool to your assistance, Rule 72.

All you need to remember is number 72. By dividing a potential yearly return into 72 the resulting product will tell you how many years it takes for such return to double the value of your money (e.g. potential yearly return 8% => 72 / 8 = 9 years to double your money).

As you understand by now, the rule can be also used to find out what kind of yearly return you should be looking for if you aim at doubling your money within a certain time frame (e.g. wanting to double my money in 5 years I would need to invest in vehicle returning 72 / 5 = 14.4% per annum).

Also referred to as NET WORTH, BOOK VALUE or NET ASSETS. It is the amount which would remain in shareholders’ pockets after repaying all the company borrowings. It is calculated by subtracting the total of all liabilities (total debt) from the total of all company assets.

It is the amount of money contributed by the shareholders to the company’s bottom line. On a typical financial statement, the shareholders’ equity amount will increase every year by that part of profits, which is retained by the company (i.e. not paid out as dividends).

Shareholders’ equity can also be thought of as the funds remaining for shareholders should their company liquidate at given date. From this reason, some investors consider it the only true fair valuation of a company.

A report of the financial status of a company. It sums up everything that a company owns (ASSETS) in one half and all the financial claims against the company (LIABILITIES) in the other half.

The total of all the assets is always equal to the total of all the liabilities as the difference is contained by an asset item called EQUITY or SHAREHOLDER’s EQUITY.