The power of compounding in one-time investment: Can a deposit of Rs 3 lakh generate a larger corpus than Rs 3 lakh investment?

The power of compounding in one-time investment: For most people who have paid, in most cases, there is an average of 30 years of investment window. A person who joins work at the age of 25 needs time to stabilize and build his own career. Once they start to earn a good salary, they spend more money on their lifestyle and sometimes improve their skills. By the age of 30, they are in a position to start their investment journey. But this is the stage when most people make mistakes. They delayed their investment and thought that once they had a big salary, they would start investing, which was a mistake of paying huge costs.

They lost a significant number of years of compound growth in investment.

This is a few years, and if used wisely, it may take their investment to new heights.

A delay of just a few years could make them lack hundreds of millions in their retirement corpus. Investment periods are strong and if used effectively, you can produce excellent results for your investment.

Smaller investments can build a larger corpus than larger investments completed in just a few years.

Similarly, can a one-time investment of Rs 3,00,000 in mutual fund plans generate a retirement corpus that the company can exceed Rs 30,00,000 in a one-time investment of funds generated in a shorter duration?

See Calculation for an idea.

How time plays a key role in investment growth

First, see an example of how investment in mutual fund programs that grows by 12% with an annual growth of 40 years.

In 10 years, the estimated corpus will grow to Rs 3,10,585.

In 20 years, the estimated corpus will grow to Rs 9,64,629.

In 30 years, the estimated corpus will grow to Rs 29,95,992.

In 40 years, the estimated corpus will grow to Rs 93,05,097.

Just see the differences in the corpus between 20 and 40 years. More than 10 times.

Rs 2 lakh, Rs 2 lakh investment

Here, the first investment amount is only 1/10 of the second. However, if Rs 2,00,000 grew by 35 years and increased by 20,00,000 in 14 years, both of which are 12% annual returns, then smaller amounts may result in a relatively large corpus with higher investment amounts. Let's see how.

Investment in Rs 200,000 in 35 years will grow to a corpus of Rs 1,05,59,924, with an estimated capital gain of Rs 1,03,59,924.

By comparison, investment in Rs 20,00,000 in 14 years will grow to an estimated Rs 97,74,225, with an estimated capital gain of Rs 77,74,225.

Just look at the estimated capital gains for both investments.

Over the past 35 years, an investment of Rs 2 million has grown far more than the investment of Rs 2 million in 14 years.

Why do we get such a comparison result

These are not the results of comparison. This is why it gets returns on the rate of return due to compound growth, and this is the growth of investment. Investment has grown due to the snowball effect.

Investment of Rs 3,00,000, and investment of Rs 30,000,000

Now apply the same logic to these 2 investments.

Here we will invest Rs 300,000 in 40 years and Rs 30,000,000 in 19 years. In both areas, we expect an annual return of 12%. Let's look at the large bonds we can get in both cases.

Investment corpus of Rs 300,000 in 40 years

The estimated capital gains for investments of Rs 300,000 over the past 40 years will be Rs 2,76,15,291 and the estimated corpus will be Rs 2,79,15,291.

Investment corpus of Rs 30,00,000 in 19 years

The estimated capital gains for investments of Rs 300,000 over the past 40 years will be Rs 2,28,38,285 and the estimated corpus will be Rs 2,58,38,285.

The difference in estimated capital gains generated is Rs 47,77,006. The winner lowered the investment by Rs 3,00,000.

The cost of delayed occupational investment

Considering the example given above, let's look at the example of investment delay cost.

A 30-year-old professional wants to start a monthly investment of Rs 10,000 in a mutual fund, with a 5% increase per year. They want to do this until they are 60 years old.

If they start at age 30, 35 and 40, see results.

If they start from 30, the total investment will be Rs 79,72,662, with an estimated capital gain of Rs 3,87,85,512 and an estimated corpus of Rs 4,67,58,174.

If they start at a price of 35, the total investment will be Rs 57,27,252, the estimated capital gain will be Rs 1,91,01,233 and the estimated corpus will be Rs 2,48,28,485.

If they start from 40, the total investment will be Rs 39,67,914, the estimated capital gain will be Rs 87,85,809, and the estimated corpus will be Rs 1,27,53,723.

Delay for 5 years, check the difference in capital gains.

in conclusion

The conclusions of all the calculations shown above show that it is always good to start your investment journey early.

With hundreds of thousands of additional investments, the results may be great.

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)