Post office schemes: Check out in how many years your money will double2 min read . Updated: 05 Jul 2021, 05:07 PM IST
- An investor should use Formula 72 to calculate how much time it would take to double its money
Post office schemes are considered secured saving instruments as they are backed by Government of India (GoI). Through India Post, GoI offers slew of schemes that given attractive return on completely risk-free investment. Kisan Vikas Patra, 5 Year Recurring Deposit Scheme, National Savings Certificate, Public Provident Fund (PPF), Sukanya Samriddhi Yojana, etc. are some of the most prominent post office saving schemes that delivers better yield at zero risk. So, if someone is looking to invest in risk-free investment option, he or she should look at these post office savings instrument to get its money doubled at highest possible interest rates.
Speaking on how to calculate the time an investment instrument would take in doubling one's money Manikaran Singhal, Founder at goodmoneying.com said, "An investor should use Formula 72 to calculate how much time it would take to double its money. The simplest way is to divide 72 by the annual interest rate offered by the investment plan. The outcome will be the time that plan will take in doubling one's investment."
Using this Formula 72 here is the list of post office schemes and the time it would take to double one's money:
1] Kisan Vikas Patra: As per the India Post website, Kisan Vikas Patra scheme offers 6.9 per cent annual interest, which is compounded annually. In this scheme, no need to apply Formula 72 as the scheme aims to double one's money in 124 months — the maturity period of the scheme.
2] Public Provident Fund (PPF): This is also one of the post office schemes where one gets higher interest rate on quarterly basis. Assuming the same interest rate for entire investment period, one's one time deposited money will get doubled in near 10.14 yrs or 122 months. The investor should keep in mind that PPF interest rate is announced on quarterly basis and it may change from one quarter to another quarter.
3] Sukanya Samriddhi Yojana (SSY): In this scheme, one will get 7.6 per cent quarterly interest rate. Assuming the same interest rate for entire period then an investor’s one time deposited money will get doubled in approximately 9.47 yrs or 113 months. For further information to the readers, SSY interest rate is paid on quarterly basis and it can change from one quarter to another — depending upon the GoI announcement.
4] National Saving Certificate: In this post office saving scheme, the interest rate offered is 6.8 per cent per annum and it is compounded annually as well. So, by applying Formula 72, one's money will get doubled in approximately 10.6 yrs means in around 126 months. But, the scheme has maturity period of 5 years. So, one will have to remain invested for another five years to get close to the double of one's money invested in the scheme.
5] 5 years Time Deposit: In this time deposit scheme, the Indian Post office is offering 6.7 per cent annual interest, which is compounded annually. The scheme has maturity period of 5 years, which is not enough for doubling one's money. So, let's use Formula 72 that says one's money in this scheme will get doubled in around 10.74 years, means by remaining invested in the scheme for another five years after maturity will help the come close to the double of one's investment.
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