SIP Early Investing: Financial advisors often say that if you want to see the real power of compounding on your investments, then start investing as soon as possible. Your investment goal should be for the long term. A recent research report released by Funds India Research has explained the power of early investing. According to the report, every one year delay in starting investment takes you far behind compared to those investors who started investing before you.
Will fall short of meeting the target
The more you delay investing, the more you will fall behind your financial targets. Or to meet the financial target, you will have to spend more from your pocket. According to the report, this applies to both SIP and lump sum investment. The wealth of a person who invests lump sum at the age of 20 can increase 100 times by the age of 60, whereas after a delay of 10 years, he will get only 30 times the return. If there is a delay of 20 years then the wealth will increase only 10 times. That means you miss out on taking advantage of the power of compounding.
Monthly SIP: How much SIP will have to be done for Rs 10 crore fund?
Estimated Returns @12% p.a.
Fund target: Rs 10 crore
Duration: Investment till the age of 60
Start investing at the age of 25: Monthly SIP of Rs 15,000
Start investing at the age of 30: Monthly SIP of Rs 28,000
Start investing at the age of 40: Monthly SIP of Rs 1,00,000
(Source: FundsIndia Research, Assuming CAGR at 12%)
It is clear here that if you start SIP at the age of 25 with the aim of accumulating Rs 10 crore by the age of 60, then for this you will have to invest Rs 15,000 monthly.
Whereas, if you start SIP at the age of 30 with the aim of accumulating Rs 10 crore by the age of 60, then for this you will have to invest Rs 28,000 monthly.
If you start SIP at the age of 40 with the aim of accumulating Rs 10 crore by the age of 60, then you will have to invest Rs 1,00,000 monthly.
lump sum investment how much return
Amount: Rs 1 lakh
Estimated Returns @12% p.a.
Till when to invest: Till the age of 60
Investing in 20 years: You will get Rs 1 crore at the age of 60 i.e. 100 times return
If you invest in 30 years: you will get Rs 30 lakh at the age of 60 i.e. 30 times return.
If you invest in 40 years: you will get Rs 10 lakh at the age of 60 i.e. 10 times return.
(Source: FundsIndia Research, Assuming CAGR at 12%)
It is clear here that if you invest lump sum in 20 years, your money can increase 100 times by the age of 60. Whereas on a delay of 10 years the return will be 30 times and on a delay of 10 more years the return will be only 10 times.
