They say is it compound interest. Yes they are right but the other most important powerful thing is time. Sometimes all you have to do is 'do nothing' to make your money grow.
Lets take an example for a 20 years scenario. Lets assume that we invest Rs 10,000 a month in a modest recurring bank account giving interest rate of 8% compounded monthly. What should be the sum after 10 years? 18,50,000 by saving 12,00,000. Not so impressive! But after 20 years it would be 59,00,000 by saving just 24,00,000.
Lets take interest rates of 12%. After 10 years resultant sum would be 23,33,000 by saving 12,00,000. Good! But just imaging the 20 years time frame; the sum would be whooping 1,00,00,000.
Could you guess your savings if you could manage 15% for 20 years? It will be 1,51,00,000.
Now just for fun, lets imagine it is 30% for 20 years. 10,000 monthly savings will lead to unimaginable 15,32,50,000.
This is power of time and compound interest.
Are these numbers unrealistic? Not much! We have couple of mutual funds which have give more than 30% CAGR for more than 10 years.
Had I started my investments in any such mutual funds, I could have retired in the age of 30 by now!
But it needs patience and trust. Do we have anymore of it in Indian market?
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