I want to invest Rs 1000 per month
Year 10: Rs 2.4 lakhs Do you want to invest Rs 1000 per month ?
Start a SIP in Equity Mutual Funds. Over the next 5 to 10 years you can create significant wealth.
Here is how much your money can grow at the rate of ~12% per annum if you invest Rs 1000 per month.
· After year 5, you can have: Rs 0.9 lakhs
· After year 8. you can have: Rs 1.7 lakhs
If you continue doing this, you can have the following amounts in:
· Year 15: Rs 5 lakhs
· Year 20: Rs 9.7 lakhs
· Year 25: Rs 18 lakhs
· Year 30: Rs 32 lakhs
· Year 35: Rs 58 lakhs
Imagine if you are a 25 year old who starts investing Rs 1000 and continue to do it till you retire at the age of 60 – Your small saving per month will grow from Rs 4.2 lakhs (1000 x 12 months x 35 years = Rs 4.20 lakhs) to Rs 58 lakhs.
That’s the magic of compounding and investing in the Equity asset class on a regular basis.
Note: The 12% return is a conservative assumption as Equity as an asset class has given a return of 16 – 17% per annum over the last few decades. However, there is no guarantee that it will grow at such rates hence the 12% assumption.