How to Grow Rs 100 into Rs 5,095 in 30 years?

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Is Bank Deposit a Bad Investment?

Banks take money as deposit from you at around 7% interest and lend it to public at around 15% through unsecured loans. As the investor, you get 7% and the bank gets 8%. Fair? NO!!!

Money devalues due to inflation. India has 5.77% inflation. Hence, if you deposit Rs.100 in a bank today and you get Rs.107 after a year with 7% interest, actually you are getting only Rs. 101.23 (107 – 5.77 = 101.23). Hence each 100 rupees of your money only gets you Rs 1.23 worth of value per year as return!!!

But for the bank, which did not invest any money, there is no inflation. Hence, the bank still makes Rs.8 on your investment of Rs.100.

Thus the bank makes 6.5 (8/1.23 = 6.5) times as much as you make using your money. Also, just 1.23% for 1 year is a very slow growth rate. If you deposit Rs.100 in bank now, it will earn JUST Rs 44 worth of value in 30 years.

How Is 14% Interest 22 Times Better Than 7%?

Adjusted for inflation, 14% interest becomes 8.23% (14 – 5.77 = 8.23) value increase, while 7% interest becomes 1.23% (7 – 5.77 = 1.23) value increase. 8.23% is 6.7 times 1.23%

Now comes the power of compounding (Interest on interest after first year). An average person’s career lasts for around 30 years. Let’s see how the value of Rs.100 invested in first year of career grows for 7% and 14% interest rates.

Initial Amt
Interest Rate
Increase in Value (Compound Interest minus Inflation)
1 Yr
10 Yrs
30 Yrs
Rs. 100
7 %
Rs. 1.23
Rs. 13
Rs. 44
14 %
Rs. 8.23
Rs. 120
Rs. 972
How many times is 14% better?

Over a span of 30 years, money invested at 14% interest would have earned 22 times more value than money invested at 7% interest rate.

What are the Various Investment Options?

Three are primarily 4 classes of investments:

Bank: Bank deposits generally fetch interest of around 7% per year.

Shares / Mutual funds: This is a risk based investment. The value of Nifty in January 2013 was 6,016 and in January 2017 was 8,243. This amounts to a growth of 8.2% per year.

Real estate: The investment amount is higher. Real estate has been performing neutral to negative over the past few years and given government’s policies and demonetization, real estate is expected to perform negative for the next few years too.

Gold: Gold is considered a safe investment by common people. Average gold rate (10 grams) during 2012 was Rs. 31,050 and the same during 2016 was Rs. 28,623. This amounts to a negative return of -2.1% per year.

FinTech: There is a new class of investment, the new age Financial Technology (FinTech) investments. These include crowd funding and peer-to-peer lending platforms like FriendLoan. They are also a risk based investment like mutual funds. These new age investments try to get you returns of anywhere between 12% to 16% per year.

How To Easily Get 12% to 16% Interest using FriendLoan

FriendLoan is a Peer-to-Peer lending platform. It helps investors earn high interest by lending small amounts of money (Rs 250 – Rs 500) to large number of qualified borrowers. FriendLoan takes care of sourcing, credit scoring and qualifying borrowers, legal paper work, etc while the Lenders sit back and enjoy good interest.

Lenders have to install the FriendLoan-Invest app on their Android mobile and start lending. The app is easy to use and lender can do his/her first investment in just 15 minutes.

Advantages of investing through FriendLoan:

  • Low Risk

  • High Interest

  • Easy to Use / Less Work

What is needed to invest using FriendLoan:

  • AADHAR number

  • PAN card

  • Minimum Investment of Rs 2,500

Rs 100 invested at 14% interest and compounded annually will become Rs 5,095 in 30 years.

Alternatively, if a lender invests Rs 1,850 every month for the next 30 years in FriendLoan and gets 14% compounded annual interest, he/she will get a return of Rs 1 Crore at the end of 30 years.

Invest Now to Make Your Money Grow Faster Than Market

Try FriendLoan App (4 MB)