5 Ways To Multiply Your Money In India (2016 Updated)

Money generates money. Making some extra money is a powerful tool which can help you to achieve financial independence, square off debts, save for retirement and have cash in hand to meet emergencies. Unfortunately, most people don’t realize the power of compounding until they are faced with the need to get immediate cash.

There are several ways to multiply your money. The World Wide Web is full of them. Some require investment discipline while many others are get-rich- quick schemes that fleece customers. Before you take the plunge to make your money work and grow, consider the following options.

1. P2P Lending

Have money? Lend it out. Peer to peer lending in India has emerged as an attractive option to multiply your money. If you have some money lying idle in your savings bank account, you can lend it out on leading P2P platforms like Lendbox. It also helps in diversifying your investments. Annual returns are often as attractive as 21%. There’s minimal paperwork

and no brokers or agents between you and your borrower. The P2P platform takes care of all the risk assessment of the borrower. It’s also one of the fastest ways to double your money.

There’s no compulsion to commit any fixed amount. Invest as little or as much as you want. You can also negotiate the rate of interest and terms of repayment according to your convenience.

2. Stock Market

Investing in shares yields the highest return. There’s no cap on how much you can earn and investments can double within a very short time. But unless you don’t track the markets daily it could be difficult to pick the right scripts.

Stock markets are highly volatile and are driven by several national and international factors. While there’s no limit to returns, there are inherent risks as well. But still, investing in good companies that have a sound business model and are run by a competent management will help you grow your money manifolds.

Wise investments under expert guidance can do the trick. There’s a lot of paperwork involved in stock market investing to check fraudulent investments.

3. Mutual Funds

If you want the decently good returns of the stock market, at a much lesser risk,

then mutual funds are probably the best. You can adopt the systematic investment plan (SIP) and invest as little as 500 every month to build a healthy corpus over a 10-15 year period.

The fund manager invests the money on your behalf and you don’t have to scratch your head on which stock to invest. Like in stocks where you buy shares of a company, in mutual funds, you buy units. There are several types of funds depending upon your risk appetite. There’s also the lock-in mutual fund where you have to invest a one-time lump sum for a fixed number of years. But of late, SIPs have become the preferred option.

4. Bank Fixed Deposits

These are still one of the most popular money multiplier instruments in India, largely because they are one of the safest. Bank failures are a rarity because the government has a strict control on their operations.

You know the interest rates upfront and they are not affected by market volatility. But taxes can reduce your returns, particularly if you’re in the high income bracket. Even then, a fixed deposit is compounded quarterly and is a great

instrument over the long term. The expected returns are around8% and usually higher for senior citizens. Fixed deposits have a lock-in period.Tax Free Bonds

These bonds strike a balance between the returns of a stock market and the safety of a bank or post office fixed deposit. They are fairly risk-free investment instruments that can safely multiply your money. Tax free bonds are traded on the stock exchange and you can freely buy and sell them anytime you like.

As on date, they are yielding higher returns than their face value. While your effective returns may be less, you still get a chance to pocket a decent amount of money. These bonds usually yield 8% or higher returns. Income is tax free

and that’s a greater incentive to invest in them. besides, the interest can be withdrawn at periodic intervals or can be reinvested to buy more bonds.