Fixed deposits: How long will it take to double your money? Even 10 years may not be enough | Mint (2024)
If you are a conservative investor, opting for a fixed deposit (FD) is a logical thing to do for gradual wealth creation. You invest a small or large sum in a term deposit and then stay stress-free until the date of maturity. Not only does your money remain safe, but it also gives a good rate of return that hovers around 6-7 per cent per annum.
Nevertheless, only a few investors believe that their investment would grow by 100 per cent, i.e., double. This is simply because varying interest rates are offered on different term durations.
A shorter-duration fixed deposit (FD) gives a lower rate of interest, whereas a long-duration term deposit provides a higher rate of interest.
Additionally, most banks offer the option to invest for a maximum time duration of 10 years. To let the money grow by 100 per cent, fixed deposits offering a return of 7.18 per cent should remain invested for a minimum of 10 years.
FDs that let your investment double in 10 years:
HDFC Bank: The private lender offers 7.5 per cent on 10-year deposits to senior citizens. Since the rate of return is higher than 7.18 per cent, your investment will grow by more than double. Suppose you invest ₹1 lakh, your investment will grow to ₹2.06 lakh in a decade.
On the other hand, an investment grows at a compounded rate of 7 per cent when invested by regular citizens, thus barely falling short of growing by double. When you invest ₹1 lakh for a period of 10 years, the total investment grows to ₹1.96 lakh.
ICICI Bank: It also offers the same rate of interest. So, to double your money, the only way is to invest via a senior citizen account for 10 years.
If you invest ₹1 lakh, for instance, for a period of 10 years, the investment becomes ₹1.96 lakh for regular citizens and ₹2.06 lakh for senior citizens.
State Bank of India (SBI): The largest lender offers a 6.5 per cent annualised return on a 10-year fixed deposit, whereas senior citizens are entitled to get an annualised return of 7.5 per cent.
This means if you invest ₹1 lakh for a period of 10 years, it can – and will – grow to ₹1.87 lakh if you are a regular citizen and ₹2.06 lakh if you are a senior citizen.
Bank
Interest (%)
In 10 years, ₹1 lakh grows to…
HDFC Bank
7.5
₹2.06 lakh
ICICI Bank
7.5
₹2.06 lakh
SBI
7.5
₹2.06 lakh
Bank of Baroda
7.5
₹2.06 lakh
Punjab National Bank
7.35
₹2.03 lakh
(Interest rate offered to senior citizens)
Bank of Baroda (BOB): For a period of 10 years, Bank of Baroda offers 6.5 per cent to regular citizens and 7.5 per cent to senior citizens. This means an investment of ₹1 lakh will grow to ₹1.87 lakh in the case of regular citizens and ₹2.06 lakh for senior citizens.
Punjab National Bank (PNB): The state lender offers an annualised interest of 6.55 per cent to regular citizens and 7.35 per cent to senior citizens for a 10-year fixed deposit. This means if a regular investor had invested ₹1 lakh in a term deposit for a period of 10 years, the investment would have grown to ₹1.88 lakh, and if the person were a senior citizen, the investment would have swelled to ₹2.03 lakh.
To let the money grow by 100 per cent, fixed deposits offering a return of 7.18 per cent should remain invested for a minimum of 10 years. An investment doubles in 10 years when it grows at an annualised return of 7.18 per cent.
Let me give you an example. Suppose, you want to invest Rs 50,000 in a fixed deposit at 7 per cent interest rate. Now, divide 72 by the rate of interest (7%) to know the time it will take for Rs 50,000 to become Rs 1 lakh. So, 72/7 will be 10.2 years.
This being a formula, it works in the opposite direction, too: You can figure the compound rate of return required to double your money in a certain time frame. For instance, to double your money in 10 years, the compound rate of return would have to be 7.2%.
How the Rule of 72 Works. For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years ((72 ÷ 10) = 7.2) to grow to $2. In reality, a 10% investment will take 7.3 years to double (1.107.3 = 2). The Rule of 72 is reasonably accurate for low rates of return.
The Rule of 72 is focused on compounding interest that compounds annually. For simple interest, you'd simply divide 1 by the interest rate expressed as a decimal. If you had $100 with a 10 percent simple interest rate with no compounding, you'd divide 1 by 0.1, yielding a doubling rate of 10 years.
For example, if your goal is $1 million by age 65 and you are 35 currently, you know you have 30 years to reach that goal. Based on the rule of 72, you'd need to earn only 2.4% to double your money in 30 years. The equation would be 72/R = 30.
It is possible to 10X a seemingly small nest egg now in just 25 years... a little less than 25 years, in fact. The key is compounding. If you're not familiar with the idea, compounding (within the investing arena, anyway) just means you're earning more and more money on your previous returns.
As of September 2024, no banks are offering 7% interest rates on savings accounts. Two credit unions offer high-interest checking accounts: Landmark Credit Union Premium Checking with a 7.50% APY and OnPath Credit Union High Yield Checking with a 7.00% APY.
It's an easy way to calculate just how long it's going to take for your money to double. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.
How can I double $5000 dollars? One way to potentially double $5,000 is by investing it in a 401(k) account, especially if your employer matches your contributions. For example, if you invest $5,000 and your employer offers to fully match at 100%, you could start with a total of $10,000 in your account.
If you earn 7%, your money will double in a little over 10 years. You can also use the Rule of 72 to plug in interest rates from credit card debt, a car loan, home mortgage, or student loan to figure out how many years it'll take your money to double for someone else.
Once the capital amount has been invested and the period has been chosen (e.g. 12 months, 24 months, 60 months) the interest rate is defined and locked in until the end of that chosen length of time.
Around 36 equity mutual funds doubled investors' wealth in a three-year horizon, according to data by ACE MF. Here are the top 10 schemes. The scheme offered a 196% absolute return in a three-year horizon. A lump sum investment of Rs 1 lakh made in the scheme would have been Rs 2.95 lakh in three years.
Address: 2865 Kasha Unions, West Corrinne, AK 05708-1071
Phone: +3512198379449
Job: Design Planner
Hobby: Graffiti, Foreign language learning, Gambling, Metalworking, Rowing, Sculling, Sewing
Introduction: My name is Dong Thiel, I am a brainy, happy, tasty, lively, splendid, talented, cooperative person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.