8-4-3 Investment Rule - ICICIdirect (2024)

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8-4-3 Investment Rule  - ICICIdirect (2024)

FAQs

What is the 8 4 3 rule of compounding? ›

The rule of 8-4-3 when it comes to compounding indicates a style of investment that accelerates growth with time. Initially, a corpus doubles within 8 years through an average annual return of 12% subsequently another doubling happens for the same period after another 4 years following its initial setting up.

What is the first best investment rule? ›

Rule 1: Never Lose Money

This might seem like a no-brainer because what investor sets out with the intention of losing their hard-earned cash? But, in fact, events can transpire that can cause an investor to forget this rule.

Is it possible to earn a 12% return on an investment and if so why? ›

Bonds are #loans made to corporations or governments, and high-yield bonds, also known as junk bonds, offer higher interest rates due to their higher risk. While high-yield bonds carry some additional risk, they can provide a path to achieve a 12% return for #investors willing to accept a higher level of risk.

Why do investors use the Rule of 72? ›

The Rule of 72 is a quick, useful formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return. Alternatively, it can compute the annual rate of compounded return from an investment, given how many years it will take to double the investment.

How to quickly save RS 1 crore use this 8 4 3 rule of compounding? ›

With an average annual return of 8%, your money would double to Rs 25 lakhs in approximately 8 years. In the next 8 years, it would quadruple to Rs 1 crore. This follows the 8-4-3 rule precisely—8 years to double, 16 years to quadruple, and 24 years to reach 8 times the initial amount.

How long does it take to double $5000 at a compound rate of 12% per year approx )? ›

Question: Double Your MoneyHow long does it take to double $5,000 at a compound rate of 12% per year (approx.)? PV=-5,000FV=10,000i=12N=6.12 Years.

What is Warren Buffett's golden rule? ›

"Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1."- Warren Buffet.

What are Warren Buffett's 5 rules of investing? ›

A: Five rules drawn from Warren Buffett's wisdom for potentially building wealth include investing for the long term, staying informed, maintaining a competitive advantage, focusing on quality, and managing risk.

What is the golden rule of investment? ›

“Don't deviate from the tried and true, even if there are short-term challenges that cause you to doubt yourself.” One of the best strategies for investors: a long-term buy-and-hold approach. You can buy stock funds regularly in a 401(k), for example, and then hold on for decades.

How does Dave Ramsey get 12% returns? ›

It stems from the historical average annual return of the S&P 500 (with dividends reinvested). Ramsey's website cites a New York University dataset which says the S&P 500 average from 1928 to 2023 was 11.66%. Over a shorter period of time, from 2014 to 2023, it was as much as 12.98%.

How long will it take for a $1000 investment to double in size when invested at the rate of 8% per year? ›

It will take approximately 8.66 years for the investment to double. where e is the mathematical constant approximately equal to 2.71828. To find how long it takes for an investment to double, we need to find the time t such that A(t) = 2P, where P is the initial investment. In this case, P = $1000, and r = 8% = 0.08.

Is a 7% return realistic? ›

When you factor in volatility and inflation, as well as taxes, fees and asset allocation, a more realistic expectation would be 7%, maybe even 5%. Here's why. The power of compounding is an important concept that investors need to understand.

How to double $2000 dollars in 24 hours? ›

The Best Ways To Double Money In 24 Hours
  1. Flip Stuff For Profit. ...
  2. Start A Retail Arbitrage Business. ...
  3. Invest In Real Estate. ...
  4. Play Games For Money. ...
  5. Invest In Dividend Stocks & ETFs. ...
  6. Use Crypto Interest Accounts. ...
  7. Start A Side Hustle. ...
  8. Invest In Your 401(k)
May 24, 2024

What is the 8 4 3 rule in mutual funds? ›

Now, as per the 8-4-3 Rule: Year 1-8: With a compounded return of 12% on average, your investment might reach approximately Rs 8.36 lakh by the end of year 8. It considers both your monthly contributions and the returns generated. Years 9-12: The power of compounding kicks in.

How to double your money in 10 years? ›

If you need to double your financial investment in 10 years, a savings account with a 5% interest rate, for instance, wouldn't help achieve your goals. You'd need something with a higher rate of return (at least 7.2%) to make that 10-year milestone happen.

What is the golden rule of compounding? ›

The earlier you invest, the more time your money has to grow into a nice sum. Starting early takes advantage of compound interest — the name given to the returns you make on money that you previously earned as interest. In other words, your money earns returns on its returns.

What is the 69 rule in compound interest? ›

The Rule of 69 is a simple calculation to estimate the time needed for an investment to double if you know the interest rate and if the interest is compound. For example, if a real estate investor can earn twenty percent on an investment, they divide 69 by the 20 percent return and add 0.35 to the result.

What are the rules of compounding? ›

The Rule of 72 is a heuristic used to estimate how long an investment or savings will double in value if there is compound interest (or compounding returns). The rule states that the number of years it will take to double is 72 divided by the interest rate.

What is the 7 year compounding rule? ›

For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years ((72 ÷ 10) = 7.2) to grow to $2. In reality, a 10% investment will take 7.3 years to double (1.107.3 = 2). The Rule of 72 is reasonably accurate for low rates of return.

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