Ways to Double Money
How would you feel if the money you invested in becomes twice the principal amount?
It sounds good to be true, isn’t it? There are many parameters where money can be doubled. But you shouldn’t expect logic / magic here, in terms of duration. According to Rule of 72, the duration is calculated by dividing the annualized returns by 72.
Here are some
options to double your money:
(1) Tax-free Bonds
Government has permitted a few state-run entities to issue
these bonds amounting to Rs 40,000 crore. There is already a high demand
for tax-free bonds. The interest rate or tax-adjusted
return offered by tax-free bonds is around 8.20% to 8.50% per annum. Investing in this bond can
double the money in around 8 to 9 years.
(2) Kisan Vikas Patra (KVP)
Kisan Vikas Patra (KVP) was reinstated in 2015-16. Since there was no rein on the income source invested in the scheme, and anyone could buy a plan from KVP, the policy was discontinued, However, according to new regulations, PAN card is mandatory in order to invest the Kisan Vikas Patra scheme worth Rs 50,000 paid in cash. The current rate of interest offered by KVP is 8.70% per annum, where the money will be doubled in approximately 8 years.
(3) Non-Convertible Debentures (NCD)
There are many investment avenues which can increase money . Corporate deposits is one of them. Non banking financial
companies (NBFCs) and Corporates offer higher interest rates for
non-convertible debentures and corporate deposits. The rate of return for these deposits is around
9 to 10%, based on ICRA ratings and term of the deposit. It would take
around 8 years for the money invested in this scheme, to double.
Corporate deposits are issued by companies while on the other hand NCDs
are issued by companies that also include NBFCs.
(4) National Savings Certificates
Issued by the Indian Postal Department, National Savings Certificates (NSC) is one of the safest options for investments. These certificates have a fixed tenure of 5 and 10 years, along with fixed rate of interest, calculated on the tenure. For NSCs with a 5-year tenure, the rate of interest offered is 8.50% per annum.
National Savings Certificate are exempted under Section 80C of the Income Tax Act, 1961 for up to Rs 1,50,000. There is also no TDS on the amount received at maturity of the scheme.
(5) Public Provident Fund (PPF)
Public Provident Fund or PPF is popular and reliable investment scheme provided by the Government. In order to invest in PPF, a minimum deposit of Rs 500 per annum is required. The lock-in period for this scheme is 15 years. Being the lowest contribution when compared to other savings schemes, a salaried, self-employed or government employee can invest in this plan. The rate of return is offered at 8.75 - 7.1% per annum effective for that respective year of the fund.
(6) Mutual Funds (MFs)
There are several mutual funds such as ELSS (Equity Linked Savings Scheme), debt oriented, equity oriented, Balanced or Hybrid Mutual Funds, to name a few. Though there is a market risk associated with mutual funds, the rate of return is higher compared to other investment instruments available. The rate of return for mutual funds depends on the tenure of the fund chosen by the investor. Long term mutual funds offer 12% to 15% per annum as rate of return. Doubling money through mutual funds will take approximately 5 to 6 years.
(7) Gold ETFs
Gold is an irresistible commodity in India. This yellow metal is an excellent avenue for investment. Gold Exchange Traded Funds (ETFs), launched in India in 2002. This is one of the easiest ways to invest in the precious metal, offer 22% rate of return annually. Though highly volatile, depending on the stock market, gold ETFs offer 22% CAGR during the tenure of 5 years, which means the money invested will be doubled in 3 to 4 years.
(8) Stock Market
Investments made in the stock market have always yielded high rate of returns. The annualized rate of return observed in the stock market in the last decade has been 15%. Investing in blue chip companies can have a scope of doubling the money in a time period of 3 to 5 years. It is, however, essential to have fundamental and technical knowledge of the stock market’s working to reduce risks.
These were some of the options to double money. A good investment option should be chosen depending on the time frame of investment and risk appetite. It is advisable to opt for long term investments, as the chances of doubling the money is reliable. Always consult an advisor before choosing any investment option.
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