Take the case of Satish and Suhair
Satish is a 35-year-old family guy, and works at a small content company in Bengaluru. He saves Rs. 10,000 every year. He started investing in mutual funds at the age of 25 and has managed to invest 10K every year, until 35 (for a total of 10 years). For family reasons, he is unable to save anymore, so this little fund grows on its own without any further investments.
Let’s say tha suhair woke up to investing at the age of 35.He have resolved to invest the same amount as Satish (Rs. 10K per year). He was determined, and each year until the age of 65 (for a total of 30 years), He saved and in
Both had exactly the same rate of return, who do you think will have more wealth at the age of 65?
The answer surprises most people. When we saw the calculation suhair was blown away. Satish wins hands down. In fact, Satish has 3x more of what suhair would have at age 65, even though suhair saved for 30 years, while Satish saved only for 10 years!!
We often do not realize that by allowing our money to follow two simple principles, we will enjoy “The Right to Prosperity.
“It’s said the early bird gets the worm.”
Systematic Investment Plan also popularly known as SIP, is a very smart and also hassle free way, to invest in mutual funds. Unfortunately, many of our citizens think SIP is an investment by itself, while it actually is a way to invest in mutual funds.Want to be a smart investor?
We at Moneymindz.com will make it easy for you. Just give us a missed call on 022-62116588 to explore our India’s best Free Advisory Service.
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This adage is best suited to the world of investing where — as with anything in life — the earlier you do your retirement planning, the greater will be your return on investment. When you start your career, your salary may be lower and hence you may have lesser disposable cash with you.
This means you’re saving capacity may not be much in absolute terms. However, do not get fazed by this because the first few years of your earning life has a huge impact on how much you end up saving for your retirement.
Thus, the most important advantage of beginning to invest early in your career is to realize the full benefits of compounding. Albert Einstein regarded compound interest as the eighth wonder of the world and had famously advised that those who understand its power, earn through it; those who do not, end up paying it.
Making compound interest work for you is the sign of a prudent investor and it is put to work when you allow your money to grow exponentially over a long period of time. Financial experts advise that a sum invested early in life, even for a shorter period will end up getting the investor more money at the time of retirement as compared to an investor who starts investing later and
Continues to invest till his retirement. This is because the power of compounding enables the former to earn more despite investing less than the latter.
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