5 ways to double your investment

Nutan Gupta

25 Sep 2017

Untitled Document

Everyone dreams of making more money. But unfortunately, everyone doesn't have the privilege to ask for a pay increase. Our day to day expenses keeps on growing at a rate which is much higher than the annual increment of our income. But a pay raise is not the only way to increase your income. These are the many ways by which you can enhance your earnings and can even double your investments:

Earning it slowly: The Classic Way

One of the most tested ways to increase your investment over time is to invest in a good, old fashioned portfolio which has both stocks and mutual funds and is not speculative. The money you invest in these will not double right away, but it will inevitably increase eventually.

To be able to speculate how much time your investments will take in growing themselves, there is a simple rule of thumb called the ‘72 Rule’. It works on the principle that if you divide 72 by the expected annual rate of return, you will be able to predict the number of years it will take for your investment to double itself.

For example, let us assume that your expected annual rate of return on your investments is 8%. On dividing 72 by 8, you will get the number of years in which your investment will double; i.e., 9 years in this case.

High Risk-High reward: The Contrarian Way

Share market is the best and the quickest way to make money. You can purchase shares online by yourself or through a broker. You can sell your shares anytime and earn quick money.

There is no denying that buying shares and stocks come with the risk of losing all of your money. However, it also includes tremendous opportunities to earn a significant amount of profits as well. If you are careful and have researched all about the earnings and the book value of the company you wish to invest in, investing in stocks and shares will ensure that you double your investment in no time.

Systematic investments: The Safe Way

Most of us have a full-time job and are very busy with work and related projects. Investing and researching about a company takes a lot of time which most people don't have. However, this doesn't mean that you are out of the "doubling your investment game."

Investing in mutual funds through SIP (systematic investment planning) provides you an opportunity to increase your investments over time without continuously monitoring the market conditions. You can invest as little as Rs. 500 every month. Your money is automatically deducted from your bank account and invested in a particular mutual fund scheme. Your mutual fund account then gets credited with units equal to the amount you have invested.

SIP provides for a systematic investment without having to worry about giving your precious time towards investment and still doubling your investment over time.

Future values: The Speculative Way

While slow and steady might work for some investors, some investors are constantly looking to increase their investments as soon as possible and are willing to take bigger risks to earn greater returns. For these kinds of investors, derivative trading is a perfect choice.

Derivatives are financial contracts that derive their value from an underlying asset. These could be stocks, indices, commodities, currencies, exchange rates, or the rate of interest. These financial instruments help you make profits by betting on the future value of the underlying asset (such as stock, futures, a commodity, currency or an index) on which a derivative's price is based.

Derivative instruments are of two types: futures and options. Futures allow you to bet on future trends in prices of an underlying instrument in which you are not required to pay the entire amount right away but only a fraction of the value of the stocks. Options give you an alternative to buy or sell the stock, commodity or a debt instrument at a target price. If you think that the stock price of a company will increase in the future, you can buy the stocks today and can sell them in the future when their price increase, giving you the opportunity to earn huge amount of profits.

Appreciation values: The Smart Way

Real estate is another investment option which is capable of doubling your money in a period as low as 5 years. It provides for a stable cash flow as you can rent the property and is far more predictable from any other investment options. Buying a house or a land today for Rs 30 lakh can increase in value by way of appreciation and yield a return of up to Rs 50 lakh in just 5 years.

Right now, real estate is little down due to demonetization. However, it is expected that this sector will soon regain its former status, thereby providing opportunities for a huge amount of profits to be amassed in a short period.

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mutual-fund

Why to Choose Mutual Funds Instead of Directly Investing Into Equities?

Whether to invest in equities or mutual funds is a question that has plagued every investor. As someone who needs the best value for his/her investment should you invest in equity directly or via mutual funds?

Let’s start by first understanding what these two terms ‘equities’ and ‘mutual funds’ stand for-

Equities- Equities generally represent ownership of a company. If you own any equity in a company, you are a part owner of the said company (depending on how much equity you own).

Mutual Funds – It is an investment scheme which is professionally managed by an asset management company. It pools together the resources of a group of people and invests their money in equities, debentures, bonds and other securities.

Why choose mutual funds over equities?

For people who’ve never invested in either stocks or mutual funds, it is hard to know which is better and where to start. Broadly speaking, if you are a novice investor, mutual funds are not only less risky but also way easier to manage. Here are some ways in which investing in mutual funds is beneficial as opposed to investing in equities -

Diversification

Mutual funds provide more diversification as compared to an individual equity stock. When you invest in equity, you are investing in a single company which has its inherent risk. For example, if you invest Rs.20,000 in buying equities of one company, you could face a total loss if that particular company performs poorly in the market.  

If you invest the same amount in mutual funds, it will be invested in different kinds of stocks and financial instruments, high-risk and low-risk both, so you might not face total loss even if one company does poorly.

Scale of Investment and Lower Costs

For an individual investor buying and selling stocks is a difficult task due to its high price. Thus, any gains made from stock appreciation are nullified if the overall trading costs are considered. Comparatively with mutual funds, as the money is pooled from a large number of investors, the cost per individual is lowered.  

Another advantage of mutual funds is that you don’t need to invest large sums of money. Buying equities for a profitable venture needs huge amounts of money, a minimum of few lakhs. With mutual funds, you can start with Rs.1000 and earn profits on that as well.

Convenience

Keeping an eye on the markets everyday is a time-consuming business, especially if you are investing as a side gig. There are people who spend their lives studying the market and still end up sustaining heavy losses. Though investing in mutual funds does not guarantee high returns, it is stress-free and needs less work as compared to investing in equities.

To sum it up

It is important to remember that mutual funds have their own disadvantages as well. Thus, as with any financial decision, educating yourself and understanding the suitability of all the available options is the ideal way to invest. 


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5 ways to double your investment

Nutan Gupta

25 Sep 2017

Untitled Document

Everyone dreams of making more money. But unfortunately, everyone doesn't have the privilege to ask for a pay increase. Our day to day expenses keeps on growing at a rate which is much higher than the annual increment of our income. But a pay raise is not the only way to increase your income. These are the many ways by which you can enhance your earnings and can even double your investments:

Earning it slowly: The Classic Way

One of the most tested ways to increase your investment over time is to invest in a good, old fashioned portfolio which has both stocks and mutual funds and is not speculative. The money you invest in these will not double right away, but it will inevitably increase eventually.

To be able to speculate how much time your investments will take in growing themselves, there is a simple rule of thumb called the ‘72 Rule’. It works on the principle that if you divide 72 by the expected annual rate of return, you will be able to predict the number of years it will take for your investment to double itself.

For example, let us assume that your expected annual rate of return on your investments is 8%. On dividing 72 by 8, you will get the number of years in which your investment will double; i.e., 9 years in this case.

High Risk-High reward: The Contrarian Way

Share market is the best and the quickest way to make money. You can purchase shares online by yourself or through a broker. You can sell your shares anytime and earn quick money.

There is no denying that buying shares and stocks come with the risk of losing all of your money. However, it also includes tremendous opportunities to earn a significant amount of profits as well. If you are careful and have researched all about the earnings and the book value of the company you wish to invest in, investing in stocks and shares will ensure that you double your investment in no time.

Systematic investments: The Safe Way

Most of us have a full-time job and are very busy with work and related projects. Investing and researching about a company takes a lot of time which most people don't have. However, this doesn't mean that you are out of the "doubling your investment game."

Investing in mutual funds through SIP (systematic investment planning) provides you an opportunity to increase your investments over time without continuously monitoring the market conditions. You can invest as little as Rs. 500 every month. Your money is automatically deducted from your bank account and invested in a particular mutual fund scheme. Your mutual fund account then gets credited with units equal to the amount you have invested.

SIP provides for a systematic investment without having to worry about giving your precious time towards investment and still doubling your investment over time.

Future values: The Speculative Way

While slow and steady might work for some investors, some investors are constantly looking to increase their investments as soon as possible and are willing to take bigger risks to earn greater returns. For these kinds of investors, derivative trading is a perfect choice.

Derivatives are financial contracts that derive their value from an underlying asset. These could be stocks, indices, commodities, currencies, exchange rates, or the rate of interest. These financial instruments help you make profits by betting on the future value of the underlying asset (such as stock, futures, a commodity, currency or an index) on which a derivative's price is based.

Derivative instruments are of two types: futures and options. Futures allow you to bet on future trends in prices of an underlying instrument in which you are not required to pay the entire amount right away but only a fraction of the value of the stocks. Options give you an alternative to buy or sell the stock, commodity or a debt instrument at a target price. If you think that the stock price of a company will increase in the future, you can buy the stocks today and can sell them in the future when their price increase, giving you the opportunity to earn huge amount of profits.

Appreciation values: The Smart Way

Real estate is another investment option which is capable of doubling your money in a period as low as 5 years. It provides for a stable cash flow as you can rent the property and is far more predictable from any other investment options. Buying a house or a land today for Rs 30 lakh can increase in value by way of appreciation and yield a return of up to Rs 50 lakh in just 5 years.

Right now, real estate is little down due to demonetization. However, it is expected that this sector will soon regain its former status, thereby providing opportunities for a huge amount of profits to be amassed in a short period.

Have Referral Code?