How To Grow Money: Smarter, Simpler, Consistent?
At 2.82%, India recorded its lowest inflation in six years in May 20251. However, this has not always been the case. For instance, in 2022, the average inflation rate was 6.7%2. When inflation increases, returns fall because it reduces the effective rate of interest, making it difficult to grow money safely.
For example, Mr A invested in a fixed deposit that gives a 7% return. However, at the time of investment, inflation was 4%. Therefore, his effective rate of interest would be 3%.
Effective rate of interest = Rate of interest - inflation Effective rate of interest for Mr. A = 7% - 4% = 3% |
Therefore, savings alone are not enough for wealth creation in India. Reinvestment of returns and utilising the benefit of compounding becomes key. This guide explores how to grow money despite inflationary trends, with new-age investing tools.
However, an insight into the best way to grow money in India through an exploration of the best fixed-income investments is crucial to understand the adverse impact of inflation.
How To Grow Money Through The Best Fixed-Income Investments In India
Fixed-income instruments aim to grow money with low risk. It is suitable for risk-averse investors who might want to generate regular returns. But what are these fixed-income investments?
What Are Fixed-Income Investments?
Assets like bonds, securitised debt instruments (SDIs), fixed deposits, etc., offer periodic returns at a fixed interest rate. These instruments are called fixed-income instruments.
Discussed in the table below are some smart ways to grow money using the fixed-income instruments available on the Grip Invest. These instruments can help investors understand how to grow passive income in India.
The table below provides a summarised take at the top fixed-income instruments On Grip.
| Instrument | Minimum investment | Return | Regulation And Rating |
| Bonds | INR 1,000 | 9% to 14% | Rated by credit rated agencies like ICRA, CRISIL |
| Corporate FDs | INR 1,000 | 8% to 10% | Rated and backed by RBI |
| InvoiceX | INR 1,00,000 | 10% to 14% | RBI or SEBI-regulated and rated |
| LoanX | INR 1,00,000 | Up to 14% | RBI or SEBI-regulated and rated |
These fixed-income generating securities are preferred due to the nature and the procedure of income generation.
However, a key problem persists that diminishes their ability to preserve their capital appreciation.
The Problem With Unused Monthly Interest
Although fixed-income securities serve the key need of consistent income, rising inflation often yields a negative impact.
Due to rising inflation, the future value of money is lower than its present value. The purchasing power of INR 10,000 in 1990 is more than what it is in 2025. Therefore, the real value of fixed interest falls over time.
For example, assume Mr R invests INR 1,00,000 in an FD that pays interest monthly for a year. Assuming an 8% interest rate, an amount of INR 666.66 gets credited to his savings account monthly. If the amount is not reinvested, after a year, Mr R matures with INR 1,00,000. However, due to the diminishing value of money, the worth of INR 1 lakh is less after a year. Moreover, the return itself (INR 666.66) appears less attractive over time.
Not only this, but several other pain points restrict the monthly interest reinvestment strategy. They are discussed below.
1. Periodic returns: Although in the case of FDs, the return can be made cumulative to take advantage of compounding, many fixed-income generating instruments like bonds pay the fixed return after periodic intervals, meaning the return cannot be reinvested automatically. Unless returns are reinvested, the absolute yield is often too low to serve as passive income.
2. Limited corpus: Assets often have minimum investment criteria. However, the periodic payout is often too small to meet the minimum criteria. Therefore, they skip reinvestment.
For example, although an INR 1,00,000 investment in a 6% bond pays INR 6,000 in a year, if the payout is monthly, an investor gets only INR 500 in a month.
3. Lock-in: The objective of fixed-income investment is not only risk minimisation but also liquidity. Therefore, given the lock-in period of most investments, reinvestment can diminish liquidity.
4. Lack of automation: As discussed before, most fixed-income assets don’t have automatic reinvestment because the interest is paid periodically. Therefore, reinvestment of unused returns requires additional effort from investors.
Therefore, to solve this problem, Grip has come up with Project Infinite.
Introducing Infinite By Grip Invest
Infinite is a smart reinvestment feature by Grip Invest that helps you grow your bond returns automatically. It acts like an auto-SIP for bonds, redirecting your earned interest from any bond or SDI into a debt mutual fund of your choice. This way, you can ensure your money is always working, compounding, and growing—without any manual effort.
You can activate Infinite while making a new bond investment, or anytime later from the portfolio section of your Grip account.
How Does Infinite Work?
Project Infinite simplifies reinvestment with an intelligent, hands-free approach:
When you activate Infinite, the interest earned on your bond or SDI is automatically invested in a pre-selected debt mutual fund.
Once your original investment matures, the principal amount can be reinvested into another bond or SDI, keeping the compounding cycle going.
Infinite continues to route interest from your new investments into the debt mutual fund, creating a self-sustaining SIP that grows over time.
Why Is Infinite A Game-Changer?
Infinite isn’t just about automation, it’s about solving real investor pain points. Here’s how:
1. Higher Effective Returns: With compounding via reinvestment, your idle interest income starts earning returns too, boosting overall yield.(E.g., an investor using Infinite with 9% Manba bonds could see up to 8% higher earnings over time.)
2. No Active Management Required: Set it up once, and let your investments grow on autopilot.
3. Built-in Diversification: Debt mutual funds add another layer of diversification to your fixed-income strategy.
4. Increased Liquidity: With no lock-ins and easy withdrawals from the mutual fund, you retain access to your money.
5. Tailored Flexibility: You can choose to pause, modify, or exit your Infinite setup anytime.
Conclusion
The answer to how to build wealth in India is simple and can be applied to all investment strategies for beginners and experienced investors alike. The answer lies in giving due importance to inflation protection and not only to risk aversion. In such a scenario, Project Infinite aims to remove the roadblocks to reinvestment to combat inflation.
Login to Grip Invest – India’s one-stop destination for high-yield investments – and activate Infinite to compound your returns automatically in 2025!
FAQs On How To Grow Money In 2025
1. How can beginners start growing their money?
It is important to protect returns from inflation to preserve and enhance their value. Reinvestment of returns allows compounding to appreciate the real value of money. Moreover, consistency in savings and investment might be key to beginners.
2. Which investment is best for growing money in 2025?
The success of any investment medium depends not only on the instrument but also on the investor. Growing money requires optimum analysis of financial goals and risk-taking ability. Moreover, reinvestment of proceeds enables compounding of returns.
3. How to grow money with a monthly income?
Monthly income from investments diminishes the future value of present capital. Investors can protect their capital from the effects of inflation by reinvesting the unused proceeds. This enables capital appreciation while generating passive income.
4. Is SIP a good way to grow money?
The Systematic Investment Plan allows investors to invest a fixed sum at regular intervals for a particular tenure. It utilises the effect of compounding to grow money. Moreover, it also helps in minimising the impact of volatility through consistency.
References:
- Reuters, accessed from: https://tinyurl.com/mryhzs2p
- Forbes India, accessed from: https://www.forbesindia.com/article/explainers/inflation-rate-india/85983/1
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