What is the Rule of 115?
The Rule of 115 estimates how long it takes for an investment to triple by dividing 115 by the annual rate of return. At 5% annual growth, 115 / 5 = 23 years to triple your money. This complements the Rule of 72 (which estimates doubling time) and provides a quick mental framework for setting long-term investment goals without a calculator.
The Math Behind It
The rule derives from the natural logarithm of 3 (ln(3) ≈ 1.099), which relates to the Rule of 72 through the ratio ln(3)/ln(2) ≈ 1.585. Multiplying 72 by 1.585 gives approximately 114.1, rounded to 115 for convenience. The approximation is accurate within one year for interest rates between 1% and 10%, making it reliable for most practical investment scenarios.
Practical Applications
The Rule of 115 is particularly useful for retirement planning. If you want to triple your savings in 20 years, you need 115 / 20 = 5.75% annual returns. Comparing the doubling time (Rule of 72) with the tripling time (Rule of 115) reveals the acceleration of compound growth: at 5%, doubling takes 14.4 years but the additional time to triple is only 8.6 more years. This demonstrates how compound interest accelerates as the base grows.