Learn to double your money faster.
All of us want the money we save to grow with time, don’t we?
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Obviously the rate of growth (i.e. how fast the money will grow) depends on the interest rate offered on our saved money.
To make things simpler, we can think about how long it will take for our money to double. That is, if I save 1,000 today, how long will it take to become 2,000?
The answer is: It depends upon the interest rate offered on our saved amount.
A very simple rule of thumb to calculate this is as follows:
“Divide 72 with the annual interest rate offered.“
The result will be the number of years it will take to double your money.
Examples of “Double Your Money”:
- If the annual interest rate is 6%, then it will take (72÷6 =) 12 years for your money to double.
- If you keep your money in a bank savings account where the interest rate is say 4%, then it will take 18 years (72÷4=18) for your money to double. [Risk : Very Low]
- In case you keep the money in a fixed deposit with an interest rate of 8% per year, then it will double in 9 years (72÷8 = 9). [Risk : Very Low]
- If you invest in company bonds with 12% interest, it will double in 6 years (72÷12=6). [Risk : Medium]
- In case you invest in Indian Share Market, say in NIFTY INDEX, where the long-term average return is around 15%, your money will double in less than 5 years. (72÷15=4.8). [Risk : High]
Hope the process of calculation is clear now, and you have learned where to invest to grow your money faster as per your risk appetite.
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