Mutual Fund Investments Power of compounding, How to become Crorepati with just Rs. 5000 /- pm?
Below article shows how Mutual Fund investments can help you take advantage of Power of Compounding to become Crorepati! Suppose person A and B both invest Rs 5,000 per month through Systematic Investment Plan (SIP) in a diversified equity fund till they are 50 years of age. However A starts at the age of 25 years and B starts at the age of 30 years, investing a total of Rs 15 lakhs and 12 lakhs respectively during the tenure. Mr. A ended up investing more Rs 3 lakhs as he started earlier. Assuming the rate of return (CAGR) at 14.45 % which is close to the average return by Sensex during the period of 1988 to 2013.
At the age of 50 years following is the return earned by them: Mr. A will get a return of Rs. 1,26,26,243 (more than a crore) against the total investment of Rs. 15 lac Mr. B will get a return of Rs. 62,10,038 against the total investment of Rs. 12 lac
Because of the power of compounding, A is able to earn Rs. 64,16,205 more than B! Moral of the story is compounding works wonders if you start early!
Start a SIP early. Invest online in Mutual Funds hand-picked using Elliott wave and Time cycles by us.
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Image reference: Kotak MF
Please note the returns are not guaranteed but might vary depending on market conditions. The below is an example to highlight the power of compounding which is mind boggling.
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