Best route to double your investment - small savings schemes vs mutual funds
In the current interest rate scenario, fixed income investors look better off with small savings schemes like PPF, NSC, KVP, etc. instead of various debt mutual funds categories
- Apr 1, 2021,
- Updated Apr 1, 2021 9:07 PM IST
The Finance Ministry distressed investors of small savings schemes by reducing the interest rates by up to 110 basis points for the April to June quarter, on Wednesday. However, the order was short-lived. Finance Minister Nirmala Sitharaman withdrew the interest rate cut order via an early morning tweet on Thursday. So, for now investors will continue to earn the old interest rates with Sukanya Samriddhi Account still offering 7.6 per cent returns, the highest among the small savings schemes. The popular public provident fund (PPF) allows 7.1 per cent interest on investments, 7.4 per cent under Senior Citizen Savings Scheme (SCSS). We did an interesting yet useful exercise to determine which of these popular investments double your money the fastest.
We will use the 'Rule of 72' to see how fast will these investments double your invested money. 'Rule of 72' is a formula where we divide the number '72' with the interest rate offered by the investment instrument to get an idea on how soon can you double your money with that particular investment. It is a useful thumb rule to plan for your goals in a better manner. Let's take a look:
The Finance Ministry distressed investors of small savings schemes by reducing the interest rates by up to 110 basis points for the April to June quarter, on Wednesday. However, the order was short-lived. Finance Minister Nirmala Sitharaman withdrew the interest rate cut order via an early morning tweet on Thursday. So, for now investors will continue to earn the old interest rates with Sukanya Samriddhi Account still offering 7.6 per cent returns, the highest among the small savings schemes. The popular public provident fund (PPF) allows 7.1 per cent interest on investments, 7.4 per cent under Senior Citizen Savings Scheme (SCSS). We did an interesting yet useful exercise to determine which of these popular investments double your money the fastest.
We will use the 'Rule of 72' to see how fast will these investments double your invested money. 'Rule of 72' is a formula where we divide the number '72' with the interest rate offered by the investment instrument to get an idea on how soon can you double your money with that particular investment. It is a useful thumb rule to plan for your goals in a better manner. Let's take a look: