Retirement Planning: How one-time investment of Rs 7,25,000 can lead to Rs 2,44,00,000 corpus in long term

Retirement Planning: We all want to see outstanding output from our minimum input. Our target is to complete a task with minimum energy spending. That's why humans invented a lot of machines, which complete work estimated to be thousands of human hours in a few hours, or in some cases, a few minutes or seconds. Investment is no different! When we make an investment, periodic or one-time, our aim is to get the maximum return. But like any machine or human effort to get the maximum output from a minimum effort, an investment can be multiplied only through a strategy. In any investment growth, time plays a key role. Because of the power of compounding, a long-term investment can give multiple time returns. Even an investment of Rs 7,25,000 may generate a retirement corpus of Rs 2,44,00,000; know it may be possible.    

Why does duration matter in every investment?

It is because investment duration is proportional to compound growth.

The longer the investment period, the faster the investment is likely to grow.

Because of that, even your small investments can convert into large corpuses in the long run.

So, time can practically save your effort to earn more if you stay for a long period in your investments. Understand this change with a couple of examples..

Rs 7 crore corpus in 25 and 35 years

A and B are chasing a Rs 7 crore retirement corpus each.

A has 35 years to invest, while B has 25 years.

Both expect a 12 per cent annualised growth each from their investments.

Let's see how much monthly they need to invest through a mutual fund systematic investment plan (SIP) to achieve that target. 

A can achieve that target with an estimated Rs 12,710 monthly SIP amount and an overall Rs 53,38,200 investment.

On the other hand, B's estimated monthly SIP investment will be Rs 41,125, and the overall estimated investment will be Rs 1,23,37,500. 

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Retirement corpus from Rs 9,00,000 one-time investment 

Now, let's see how the power of compounding can work on a Rs 9,00,000 one-time investment in 25 and 35 years.

In 25 years, estimated capital gains will be Rs 1,44,00,058, and the estimated corpus will be Rs 1,53,00,058.

In 35 years, estimated capital gains will be Rs 4,66,19,658, and the estimated corpus will be Rs 4,75,19,658.

A difference of just 10 years multiplied the worth by more than 3 times.

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From Rs 7,25,000 one-time investment to Rs 2,44,00,000 corpus 

We will see that in how many years, this target may be achieved if the annualised rate of return is 12 per cent. We will show the growth in different phases.

Retirement corpus from Rs 7,25,000 one-time investment in 10 years

In 10 years, estimated capital gains will be Rs 15,26,740 and the estimated corpus will be Rs 22,51,740.

Retirement corpus from Rs 7,25,000 one-time investment in 20 years

In 20 years, estimated capital gains will be Rs 62,68,562 and the estimated corpus will be Rs 69,93,562.

Retirement corpus from Rs 7,25,000 one-time investment in 30 years

In 30 years, estimated capital gains will be Rs 2,09,95,944 and the estimated corpus will be Rs 2,17,20,944.

Retirement corpus from Rs 7,25,000 one-time investment in 31 years

In 31 years, estimated capital gains will be Rs 2,36,02,457 and the estimated corpus will be Rs 2,43,27,457.

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