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  • Ways to Double Money

    How would you feel if the money you invested in becomes twice the principal amount? Seems good to be true, isn’t it? There are several parameters where money can be doubled. But you shouldn’t expect magic here, in terms of duration. According to Thumbrule 72, the duration is calculated by dividing the annualized returns by 72. Here are some options to double your money:

    Tax-free Bonds

    Initially tax- free bonds were issued only in specific periods. However the 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 the PFC and NTPC tax-free bonds. The interest rate or tax-adjusted return offered by tax-free bonds is around 8.20% to 8.50% per annum, for the 2015 series, depending on the tenure. Investing in this bond can double the money in around 8 to 9 years.

    Kisan Vikas Patra (KVP)

    Though made defunct in 2012, 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.

    Corporate Deposits/Non-Convertible Debentures (NCD)

    There are many investment avenues which can increase money twice the original. Corporate deposits is one of them. Non banking financial companies (NBFCs) and Corporates offer higher interest rates for non-convertible debentures and corporate deposits, in comparison to fixed deposits of banks. 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.

    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. On the other hand, 8.80% per annum interest rate is compounded for NSCs with a term period of 10 years.

    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. Another benefit of investing in NSCs is that they can be used to avail loans from any bank.

    Bank Fixed Deposits

    Fixed deposits offered y banks are a popular choice of investment. The Reserve Bank of India (RBI) has insured fixed deposits of up to Rs 1 lakh. Post the recent repo rate cuts, by the RBI, of 0.50% (0.50 bps), several banks have followed suit and slashed interest rates for fixed deposits by 0.25% to 0.50% per annum. Investing in a fixed deposit, of any bank, to double money can take around 8 to 9 years.

    Public Provident Fund (PPF)

    Public Provident Fund or PPF is another 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% per annum effective for that respective year of the fund. The maturity amount will double in around 8 years, with the money increasing in multiple folds at the end of the lock-in period.

    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.

    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.

    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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