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How to Double Your Money: A Comprehensive Guide

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How To Double Your Money?
August 30, 2024

Table of Content

 

Are you looking for ways on how to double your money? It can seem to be a challenging task, but with the right strategies and investments you can achieve your investment objectives. This guide will take you on a detailed journey that will finally help you answer the question: how to double my money?

Ways to Double Your Money Effectively

Depending on your investment period, tolerance for risk, and amount invested, there are a number of ways for you to answer the question of how to double your money in an effective manner. It may seem like a daunting task, but a balanced portfolio can help you grow your money. Here are a few ways to double your money:

  • Mutual Funds

Mutual funds offer a higher rate of return as compared to other investment options in the financial market despite a high market risk. The rate of return for mutual funds depends on the investment tenure chosen by you. According to the Rule of 72, the time taken for doubling money can be assessed by dividing the rate of return by 72.

  • ULIPs

ULIPs are a good option for people looking for ways on how to double money. They are a financial product that combines investment potential with life insurance. When you pay a ULIP premium, some part of it goes toward your life insurance and the rest of the amount is invested in market funds chosen by you. Investing in a ULIP is a good option for investors looking for long-term investment plans.

  • Kisan Vikas Patra (KVP)

The Kisan Vikas Patra (KVP) is a small savings certificate scheme that aims to inculcate financial discipline in people. With a minimum investment amount of Rs 10,000, the scheme aims to double the investment amount at the end of 115 months (nine years and five months). It is one of the safe investments available for investors that ensures guaranteed returns and capital protection.

  • Corporate Bonds

Corporate bonds are debt instruments that are issued by companies to raise funds. They provide a fixed rate of interest are investment tenure. Corporate bonds offer guaranteed returns and help double the invested amount through interest compounding. They can either be long-term or short-term investments.

  • National Savings Certificates

National Savings Certificates are issued by the Indian Postal Department and are one of the safest investment options. They offer a fixed rate of return and a fixed investment period of five to 10 years. For a short-term investment of five years, the rate of return offered is 7.7% per annum. For long-term investments of up to 10 years, the interest rate offered is 8.7%

  • Tax-free Bonds

Tax-free bonds are issued by a few select state-run institutions with fixed rates of return at 5.5% - 7.5% per annum. The interest earned on these bonds is non-taxable, and making recurring deposits can help you double your money in eight to nine years.

  • Gold ETFs

Gold ETFs allow the investor to create a diversified portfolio and gain the benefits of gold price movements without owning the physical commodity. Gold ETFs offer approximately 12.5% rate of return over five years and double the invested amount in three to four years.

  • Real Estate

Investing in real estate can help create a source of passive income. It provides a number of tax-saving benefits, generates rental income, and usually appreciates in value over a period of time.

  • Stock Market

Even though investing in different stock options in the stock markets has high risk, it also provides high returns. However, it is important to have proper knowledge of the stock market before investing to reduce your overall risk potential. Investors who are willing to opt for a higher risk profile can explore strategies such as margin trading or can opt for a contrarian approach to investing in the stock market.

  • Public Provident Fund (PPF)

A PPF is a long-term investment option introduced by the Government of India. You can invest as low as Rs 500, for a maximum investment tenure of 15 years (extendable in blocks of 5 years thereafter) and expect a rate of return of 7.1% per annum.  

  • Bank Fixed Deposit

Bank fixed deposits are a popular and safe investment option. Fixed deposits have a fixed tenure and rate of return, which cannot be modified during the investment period.

How much time does it take for your money to double?

The best way to know how to double your money is by following the Rule of 72. By dividing the rate of return per annum by 72, you will get the number of years it will take to double your money.

It should be noted that while the rule gives a fair estimate for low rates of return, the estimate becomes less accurate when it comes to high rates of return. The chart given below gives a comparison between the doubling time calculated by the Rule of 72 versus the actual time taken.

Rate of Interest

Rule of 72

Actual Time Taken

Difference (in years)

100%

0.72

1.0

0.3

72%

1.0

1.3

0.3

50%

1.4

1.7

0.3

25%

2.9

3.1

0.2

12%

6.0

6.1

0.1

9%

8.0

8.04

0

7%

10.3

10.2

0.1

5%

14.0

14.2

0.2

3%

24.0

23.5

0.5

2%

36.0

35.0

1

What is the single best way to double your money?

The best answer to how to double your money depends on a variety of factors, such as personal preferences, investment period, and risk tolerance. Having a diversified portfolio of bonds and stocks works for most investors. However, investors with a high-risk tolerance may prefer investing in speculative options such as cryptocurrencies and penny stocks, while others may wish to invest in safer options like zero-coupon bonds, retirement accounts and real estate investment.

 Are all ways usable by investors to double their money?

Yes, it is always recommended to have a diversified portfolio with low-risk as well as high-risk investment options. Keep a small portion of your portfolio for aggressive strategies after thorough research and in-depth study. Here are a few tips to keep in mind while creating your portfolio:

  • Conduct proper research on each and every investment option to clearly understand your risk tolerance before entering any investment.
  • Do not make any investment decisions based on greed and fear.
  • Be careful of investment scams that claim to provide guaranteed results with minimum risk. Go for patient investing to ensure you do not lose your hard-earned money.

Is it a good idea for a conservative investor with low-risk tolerance to invest in cryptocurrencies?

Cryptocurrencies are a highly volatile investment option due to their speculative nature, which makes them unsuitable for low-risk investors. If you are a conservative investor with a low-risk tolerance, it is advisable not to invest in cryptocurrency.

Conclusion

The only way you can effectively answer the question of how to make money double is by carefully analysing your risk potential and how much you are willing to invest. The best way to double your money safely is by creating a balanced portfolio of carefully selected bonds, real estate, ETFs, mutual funds and stocks, to name a few. Remember, it is better to be patient and have a longer investment period than to be impatient and fall prey to investment scams that help others double their money.

FAQs on how to double your money

Q. What is the easiest way to double your money?

The answer to how to double your money most easily is by investing your money in a diversified portfolio of bonds and stocks. Doubling your money over a span of several years is quite safe as long as you are patient. It is advisable to invest in low-risk bonds, real estate, and a few speculative investment options such as penny stocks and cryptocurrency.

Q. What is the quickest way to double your money?

To answer the question of how to double my money quickly, simply invest in a portfolio of investment options like ULIPs, mutual funds, stocks, real estate, corporate bonds, Gold ETFs, National Savings Certificate, and tax-free bonds, to name a few.

Q. How to multiply income?

One of the best ways to answer how to make money double and multiply your monthly income is by investing a portion either in a variety of investment plans like ULIPs, mutual funds, ETFs, bonds, stocks, etc. or by investing in rental properties that would generate an additional source of income every month.

Q. What is the rule of 72 in finance?

The Rule of 72 helps investors answer the question of how to double money and in how many years. All you need to do is simply divide the expected rate of return per annum by 72. The result is the number of years it will take approximately to double your investment amount.

Q. How do you invest money?

The main goal of investing is to answer the question of how to double your money. The best way of investing is by creating a balanced portfolio that covers high-risk as well as low-risk investments. Some investment options are real estate, gold, fixed deposits, mutual funds, stocks retirement savings contributions credit, etc.

Q. What is the best source of income?

The best source of income depends on your risk tolerance and investment tenure. Balancing your portfolio through high-risk options like stocks and mutual funds, as well as low-risk investments like real estate and bonds, can prove to be a good source of income for a long time.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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