# Rule of 240

This in principle is the same as the rule of 72, something I’ve written about in the past. This is a useful mental model when thinking long-term or say retirement goal.

It intuitively talks about what it takes to get to 10X the wealth. We tend to think linearly, and when it comes to wealth compounding takes an exponential turn. We’re not hardwired to think naturally in. This video is where I stumbled upon this rule.

This is where these mental models come in. The rule of 240 says: the time taken to 10X the amount you have at hand is 240 divided by the annualized rate of return.

Suppose you have ₹1L (₹100k) and you want to get to ₹10L, with a retirement goal of say ₹1C (₹100L). When you park it where you have a 4% interest. The time taken to 10X what you start out with ₹1L to ₹10L will take you 240/4 = 60 years.

60 years feels like an absurd amount of time. In essence, with inflation to really 10X what you have takes you longer than what is at the face of it. Not to forget, we may have sufficient capital, to begin with.

Say you start out again with the same amount, but you’re researching and picking smart places to park your wealth and have at hand an interest rate of 12% (not ridiculously high). How would this change the game for you? Revisiting the rule of 240: the time taken to 10X the ₹1L (to ₹10L) you start out with is 240/12 = 20 years. Similarly, getting from ₹10L to ₹1C would happen another 20 years with consistency. This feels like something you could anticipate to see at least in a career.

Notice it does not take into consideration the amount you start out with. It just gives you an intuition for the time horizon.

Thinking in doublings or 10X is a mental model people like Buffet have mastered.

Keystone decisions coupled with patience create for us an interesting wealth playbook in the long-term.