[No. 84] Painting the Future with the "Rule of 72 and 114"—Investing by Making Time Your Ally 📊⏳
The Rule of 72 and the Rule of 114 📐📘
There are concepts known as the "Rule of 72" and the "Rule of 114."
If you divide the rate of return by 72, you get the number of years it takes for your assets to double; divide by 114, and you get the number of years it takes for them to triple.
5% annual rate → doubles in about 15 years, triples in about 23 years
7% annual rate → doubles in about 10 years, triples in about 16 years
10% annual rate → doubles in about 7 years, triples in about 11 years
The charm of these rules is that even if you aren't good with numbers, you can intuitively visualize the future.
—I wish I had known this sooner, says my current self (laughs).
Learning from the Path of Each Market 📈🌍
Looking back at the stock market, the U.S. S&P 500 has averaged roughly 7% annually, and global stocks have grown steadily, supported by the peace of mind that comes with diversification. The Nikkei 225 went through a long period of stagnation, but in recent years, it is finally showing signs of a revival.
In past articles, I have organized my thoughts on the meaning of investing in Japanese stocks, the significance of re-evaluating the S&P 500, and the value of choosing global stocks.
👉 [No. 29] No Matter How the Nikkei Moves—My Thoughts as an Individual Investor Investing in Japan 🇯🇵📈
👉 [No. 44] Trusting and Entrusting My Own Capital—Taking Another Look at the S&P 500 🌎💰
👉 [No. 47] The Choice to Believe in the World—Global Stocks and My Investment Journey 🌍📈
Simulating the Future 💵🔮
Let's assume you invested 1 million yen in the S&P 500 on January 1, 2025. If it grows at an annual rate of 5%,
After about 15 years → 2 million yen (doubled)
After about 23 years → 3 million yen (tripled)
These figures are merely a rough calculation. Actual markets fluctuate, and returns are not constant. Even so, just having the outlook that it will "double in about 15 years and triple in 23 years" helps calm a wavering heart along the long journey.
For example, even if a major decline like the Lehman Shock or the pandemic occurs, when viewed on a long-term graph, it is just a "part of the ups and downs." In fact, if you buy more during a downturn, there is a possibility that growth will accelerate further during the subsequent recovery.
Rather than worrying about fine numbers and letting them sway my emotions, I want to cherish a broad image of "growing to this extent over this span of time." I don't try to predict asset growth accurately, but rather,believe that because time is on my side, every step I take now has meaning.
How to Approach Investment 🧭❤️
I don't get too hung up on the ups and downs of specific numbers. I think a rough goal like "I'd like to be at this level by age 40" is sufficient. Investment is a power to protect precious time, and it is something that accompanies my daily life.
In long-term investing, "time" is your greatest ally. That is precisely why there is real meaning in entrusting capital to Japan, to the U.S., and to the world.
At the end of the day, what matters is not the number of your assets, but how you spend your time with the people you care about. I will continue to invest to support that future.
👉 [Vol. 61] Sharing with Loved Ones—Investing and Bridging the "Generational Gap" 🤝📈
⚠️ Note: Regarding the financial information covered in this article
📝 This article is based on the author's experience and personal opinions.
💹 It is not intended to recommend any specific financial products.
📊 Information may contain errors due to revisions or updates.
✅ Please make your own decisions and investments at your own risk.
Fields, bodies, and investments—a way of life that keeps on tilling.
Renji Enko
