How to become rich fast: Double your money every 5 years; Know this secret formula
Through compounding, your return is actually added to the investment, thereby increasing your returns year after year.
How to become rich fast is a serious question that runs through the mind of every person out to earn a living. There are ways to do it and even if you want to turn your small savings into something far bigger or want to get excellent returns on your investments, then you have to know this amazing formula and harness it properly to make you rich! This secret formula is nothing but the power of compounding. The alliance of time and compounding has the strength to make your small investment to turn just thousands of rupees into crores! Yes, literally!
So, what is compounding and how does it benefit you?
To answer all these questions on Zee Business, here is Fincart's founder and MD Tanveer Alam. According to Alam, Compounding / Compound Interest facilitates double benefit as you get interest on the amount invested. Under this, you not only get interest on principal amount but also get interest on the interest across a period of time. Therefore, earning through investment and then investing this amount is compounding, which is helpful in increasing your investment, This is how you earn more money in less time through compounding, he added.
Through compounding, your return is actually added to the investment, thereby increasing your returns year after year. Since this facilitates fast growth of your money, you can turn a SIP of Rs 5,000 into Rs 3 crore within 30 years of continuous investment, according to the Zee Business report.
However, you need to follow two mantra for achieving this target; Firstly, you should go for a long term investment; secondly, you should stay with your investment. Sooner you start making investment, the more profit you will get through compounding.
— Zee Business (@ZeeBusiness) July 9, 2019
Those who are interested should start from young age. If you begin at the age of 25, you would be able to make your fund into Rs 1 crore by the age of 60 years. And this can be started with an investment of Rs 1560, however, a 35-year-old person will have to begin with a monthly SIP of Rs 8000, while 45-year-old will have to invest Rs 30,000 per month.
If you want to double your fund every 5 years, you need to begin a monthly SIPs of Rs 5,000. With 12% annual returns on your investment, your money will be doubled every 5 years.
The strength of compounding can be availed of by youth especially? They should, actually, begin their investment early as it would be more advantageous. The young person who just started her or his job should start investing soon after that. They can start investment for purchasing a car, home, and also plan for their retirement. They would get the benefit of compounding according to their target period, the report added.
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