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START EARLY TO WIN THE INVESTMENT RACE

By   /   November 11, 2018  /   No Comments

“Itni zaldi bhi kya hai, ek-do saal mein investment shuru kar lenge”. This is what I hear from people when I try to motivate them to start investing early. If you are planning to save for your Retirement days or any other long term goals, don’t wait for another 5 years to start, START NOW. You may not realize, but you need to save double the amount in case you delay the investment by just five years. Let me explain this with the help of an example:

 

Let’s assume there are two investors named ‘A’ & ‘B’.

Current age of both the investors: 30 years

Retirement age: 60 years

Investor A starts investing from today and will keep on investing till he reaches his retirement age of 60 years of age.  He started investing Rs.5,000 per month.

 

INVESTOR A

AMOUNT INVESTED PER MONTH (RS.)5000
INVESTMENT TENURE IN MONTHS360
INVESTMENT TENURE IN YEARS30
RATE AT WHICH INVESTMENT IS DONE15%
TOTAL AMOUNT INVESTED (RS.)1800000
AMOUNT ACCUMULATED AFTER 30 YEARS (RS.)35049103

 

Whereas B delays the investment plan by 5 years. He decided to invest double the amount invested by A i.e. Rs.10,000 per month.

 

INVESTOR B

AMOUNT INVESTED PER MONTH (RS.)10000
INVESTMENT TENURE IN MONTHS300
INVESTMENT TENURE IN YEARS25
RATE AT WHICH INVESTMENT IS DONE15%
TOTAL AMOUNT INVESTED (RS.)3000000
AMOUNT ACCUMULATED AFTER 30 YEARS (RS.)32840737

 

From the above two charts we can conclude that even after investing double the amount, investor B was few lakhs short than investor A.

That’s the Magic of Compounding where over a long period of time interest income multiplies at such a fast rate.

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” – Albert Einstein

To summarize: The power of compounding is the single most important reason for you to start investing RIGHT NOW. Remember, every day that your money is invested, is a day that your money is working for you.

 

 

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  • Published: 5 months ago on November 11, 2018
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  • Last Modified: November 11, 2018 @ 5:58 pm
  • Filed Under: Must Read

About the author

Hi My name is Hari Om Tripathi. I am an engineer by chance & a Personal Financial Planner by choice. Currently residing in Kanpur & writing full time for Financial Kundali. In case you have any query about Personal Financial Planning such a buying a MF or ULIP, going for a life insurance plan or a term plan, to surrender your policy or not or any other questions related to your Personal Financial Planning, write to me at financialkundali@gmail.com

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