The Treasury has pressured small-scale savings investors to reduce interest rates to 110 points in the April-June quarterly quarter, on Wednesday. However, the order was short-lived. Finance Minister Nirmala Sitharaman rescinded interest rates by tweeting early Thursday. Therefore, at the moment investors will continue to receive old interest rates through the Sukanya Samriddhi Account still offering a 7.6 per cent return, which is the highest number in small savings programs. The popular provident fund (PPF) fund allows 7.1 percent interest on investments, 7.4 percent under the Adult Social Security Scheme (SCSS). We’ve done an exciting but useful exercise to find out what your favorite crop doubles than your fastest money.
We will use ‘Rule of 72’ to determine how much of this amount will double your investment. The ‘Rule of 72’ formula is when we divide the number ‘72’ with the interest rate offered by an investment tool to get an idea of how much you can double your investment on that investment. It is a sixth step in planning your goals.
Let’s start with a savings bank account that offers a low interest rate of 4 percent. According to rule 72, a bank account will take 18 years to double your money. This opens the eyes of investors who do not take the financial system seriously and continue to allow their money to remain idle in the savings account in order to earn the lowest interest rates. While a savings account is a good place to keep part of your emergency fund, it will hurt your finances if you do not invest your money to get a better return.
About 5% of bank FDs will take more than 14 years to double your money (Applying Rule 72 = 72/5 = 14.4). A fixed income saving tool used, PPF will take a little over 10 years to double your income. (72 / 7.1 = 10.14).
Similarly, Sukanya Samriddhi Yojana, the government’s girl child program, with an ongoing interest rate of 7.6% will take about 9.4 years to double your income. Kisan Vikas Patra (KVP) will take 10.43 years to double your current interest rate of 6.9 percent.
At 6.8 percent, Five-Year National Preservation Certificates will double your investment in 10.5 years. Although, these instruments do not have to allow you to invest at the right time to double your investment, this test gives you a better idea of what these returns mean and where this type of profit will take your investment.
Compared to the relevant categories of the payroll fund, currently the medium-term and long-term joint funds offer a return of 6.6 percent on average. Medium-term investments have Macaulay portfolio periods between 4 and 7 years. The Dynamic Bond Funds, which can invest for a long time at the discretion of the fund manager, have yielded an average return of 6.8 percent. In the current annual return percentage, as stipulated in Act 72, these programs will double the investment of investors by approximately 10.7 years.
In the current interest rate scenario, income investors look better with smaller savings plans instead of the upper class of combined debt financing. However, it is uncertain how long the government will hold current interest rates as these returns are limited to the product in government stocks. It is calculated based on a predefined formula