Start investing early in life. It is not very important that how much you invest but how long you can remain invested. Understand power of compounding. It's the eighth wonder of the world(Albert Einstein).
Example :
Amount : 10k per month
No of years : 30
Expected rate of return: 15%
Your investment: 36 lakh
Resultant Amount: 07 crores
Amount : 1 lakh per month
No of years : 15
Expected rate of return: 15%
Your investment: 1.80 crores
Resultant Amount: 6.77 crores
The above example shows that to reach the target of 7 Crores in half the time i.e. from 30 years to 15 years, you have to increase the amount by 10 times (from 10k to 1 lakh). Power of Compounding creates magic in long term. With an expected CAGR of 14-15 %, the investment doubles every five years. Once a substantial base is made of, say 20 lakhs, the power of compounding kicks in. 20 Lakhs to 40 in next 5 years to 80 in next 10 years to 1.60 Cr in next15 years to 3.2 Cr in next 20 years. You can extrapolate what will happen to your investment in another 20 years. So, remember it is the time which is more important than amount in long term investing. Start early and keep stepping up your investment every year by 10% and reap the benefit in next 20 years.
DISCLAIMER : The above information is available on public domain and has been taken mostly from websites and YouTube videos freely available on internet. The opinion expressed above is in no way recommendation of buying or selling. You must consult your financial advisor before making any fresh investment in equity market.
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