How to double your money? What are some ways to double your money in the 21st century? Is it mutual funds or ETFs? Should we invest in stocks or funds? We are all surrounded by these queries constantly.
With the rise of financial influencers around us, financial literacy and conversation have become the norm. While it is illuminating, it can be confusing as well.
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1. Mutual Funds
Mutual funds come in different types such as ELSS, equity-oriented, debt-oriented, and balanced mutual funds. It is a good way to double your money but be careful of the risks and consult a good financial advisor before starting your journey. Reading all documents and staying updated are equally important.
Although there are risks involved with investing in the stock market, mutual funds have historically offered higher returns than other investment options.
Therefore, it can be a good way to grow your money. The return on investment for mutual funds is determined by their tenure, with long-term mutual funds offering rates of 12% to 15% per year.
It may take about 5 to 6 years to double your investment with these mutual funds.
2. Kisan Vikas Patra (KVP)
This savings scheme is classified under the Post Office Small Saving Scheme. It was discontinued for some time but was reintroduced in the initial quarter of the fiscal year 2015-16.
The Indian Government periodically revises the interest rates and tenure to boost returns. The interest rate for the Kisan Vikas Patra (KVP) for the period of April to June 2021 is 6.9%.
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3. Corporate Bonds
Compared to other investment options, bank deposits tend to offer lower interest rates. If you are seeking higher returns, corporate bonds may be a more attractive option.
The interest rates on corporate fixed deposits (FDs) or non-convertible debentures (NCDs) are determined by the issuer’s credit score and market reputation.
4. National Savings Certificates
National Savings Certificates (NSC) are issued by the Indian Postal Department, and they are considered a highly secure investment option.
These certificates have a fixed tenure of either five or ten years and a fixed interest rate. For NSCs with a 5-year term, the interest rate is 8.5% per year, while for NSCs with a 10-year term, the rate is 8.8% per year.
NSCs are exempt from income tax under Section 80C of the Income Tax Act 1961, up to Rs 1,50,000. There is no TDS charged on the maturity amount received. NSCs can also be used to obtain loans from any bank.
5. Tax-free Bonds
Previously, tax-free bonds were only issued for a limited period of time. However, the government allowed a few state-operated entities to issue tax-free bonds up to INR 40,000 crore.
These tax-free bonds from NTPC and PFC are in high demand. For the 2015 series, the tax-adjusted return or interest rate offered by these bonds ranged from 8.20% to 8.50% per year, depending on the tenure.
It is possible to double your investment in around 8 to 9 years through these bonds.
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6. Gold ETFs
Gold is a popular investment option as it has provided consistent returns of around 10%. To make gold investments even more lucrative, you can consider investing in Gold ETFs and Gold Bonds.
Another option is to invest in the Sovereign Gold Bond Scheme, which is regulated by the RBI and the Government.
The scheme allows you to own Gold in certificate form, with the value of the bonds determined in multiples of one gram of Gold. The minimum initial investment is one gram, and you can earn 2.5% interest per year on the amount invested.
The lock-in period for the invested amount is eight years. It typically takes around eight years to double your investment in Gold ETFs.
7. Real Estate
Investing in residential real estate is also a viable option to double your money. Not only can you generate a regular rental income, but you can also own an asset, diversify your portfolio, and save taxes.
It typically takes 6 to 7 years for the value of your property to double. However, real estate investments require a significant amount of capital.
The returns on such investments are influenced by multiple factors, including the location and infrastructure development in the neighboring areas.
8. Stock Market
Investing in stocks is a great way to double your invested money and build wealth. However, direct stock investments carry high risks, and you could lose up to 50% of your investment.
On the other hand, the returns on individual stocks can be equally high, with big companies offering returns of over 20% over longer periods. For instance, Eicher Motors Limited had a five-year CAGR of 28.77%.
With such returns, you can expect to double your wealth in 3.5 years. It is still advisable to invest in stocks for the long term (five years or more) to minimize risks and maximize returns.
9. Public Provident Fund (PPF)
To invest in PPF, a minimum of INR 500 per year is required, and the scheme has a lock-in period of 15 years. Compared to other savings plans, PPF offers the lowest possible contribution.
Salaried, self-employed, and government employees are eligible to invest in this scheme. The rate of return for each year in the fund is 8.75% per year. With such a rate of return, your invested money may double in 8 years.
