How to double your money? How easy it is or how tough it is? When it comes to investing, many of us have a mindset to look into when our money will double. Let us see the concept of doubling our money.
Have you heard an insurance agent claiming you in how many years your money will double by investing yearly? Have you heard the real estate stories where their calculation is purely based on like in how many years your money will double?
Rule of double your money
There is one general formula to calculate like in how many years your money will double. Even though I am not a fan of such generic formula, I am just sharing it here for your understanding. It is called Rule of 72.
T=72/R (Where T=Time taken to double your money and R= Rate of interest on your investment).
Let us say R=12%, then the time taken to double your money is 6=72/12. Like this, you can randomly calculate the rule of 72 or to understand in how many years your money can double.
It is EASY to DOUBLE YOUR MONEY!!
Yes, it is easy to double your money. No doubt in that. But the biggest question you have to ask yourself is WHEN or AFTER HOW MANY YEARS.
Let us take few examples like if you are investing in various assets, then how much time it will take to double your money.
- If you are parking your money in savings account where the returns are around 4%, then it will take 18 years to double your money.
- If you are parking your money in a Bank FD where the returns are around 6%, then it will take around 12 years to double your money.
- If you are parking your money in PPF (where the returns are around 7.1%), then it will take around 10.14 years to double your money.
- If you are parking your money in EPF (where the returns are around 8.5%), then it will take around 8.47 years to double your money.
- If you are parking your money in Equity (Stocks or Mutual Funds) (where the returns are around 10%), then it will take around 7.2 years to double your money.
You notice that doubling your money is easy in each asset or product. But the question to ponder upon is WHEN and HOW MUCH TIME IT WILL TAKE. Never be in this trap of where my money will double. Instead, ask yourself how much time it will take to double.
Especially when it comes to selling few financial products or real estate, sellers always try to point this method to grab your attention. Because by nature, since childhood, our mind is attracted to this form of thought process.
Let us look for some Google Keyword search results like what people often search. I noticed these few searches very interesting.
Notice the keywords which I highlighted and how funny they look. If we modify the search keyword, the result is still horrific and funny to say.
You notice that how few even searched with keywords like “how to double our money in 24 hours”!! This is nothing but a GREED. These types of investors are an easy targets for scamsters. Many scams across the world happened, happening, and will happen all because we are GREEDY.
Try to understand the risk involved in such catchy schemes or assets. Wealth creation is boring but not thrilling. If someone claiming that he/she will make your money double fastly than the Bank FD rates, then usually you must think that there is some sort of risk. That is the reason the probability of your money getting double is faster. Try to understand the risk whether it is Bank FDs, Equity or any schemes where such eye-catching sales taglines are used to lure you.
Conclusion – Doubling your money is easy but when and from which asset class is what you have to think it. Otherwise, the financial industry (or even the real estate industry) is eagerly awaiting for YOU!!