Power of Rs 4,50,000 One-time Investment: How your Rs 4.50 lakh lump sum deposit can generate corpus worth Rs 3 crore in long term
Power of Rs 4,50,000 One-time Investment: The benefit of staying in the investment for a long duration can be that one may see their one-time investment grow by many times. Their Rs 4,50,000 one-time investment can grow to over Rs 3 crore. See how it may be possible-
Power of Rs 4,50,000 One-time Investment: If you have a small investment and want a large corpus from it, it can be possible in two ways – one, you get a high return, or two, you stay in your investment for a long time. A return is possible if you have invested your amount in market-linked investment options. But with a high return comes a high risk, so the performance of your investments can have many ups and downs. The other way around is to stay for a long time in your investments. Even if one chooses market-linked investment options where it can go through fluctuations, in the long term, strong growth is possible. A Rs 4,50,000 one-time investment can generate a corpus worth Rs 3 crore. Know that in how many years, it may be possible.
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(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
How investment grows
We will show how investment grows when one gets a high return and when they stay in their investment for a long time.
In our example, we will show how much extra corpus a Rs 5,00,000 one-time investment can give if it grows at 15 per cent annualised instead of 12 per cent in 30 years.
Investment growth at 12%, 15% returns
At a 12 per annualised return, estimated capital gains will be Rs 1,44,79,961; the estimated corpus will be Rs 1,49,79,961.
However, if the annualised growth is 15 per cent, estimated capital gains will be Rs 3,26,05,886 and the estimated corpus will be Rs 3,31,05,886.
Investment growth at 12%, 15% returns
This difference is because of the compound return on investment.
Just a 3 per cent extra investment makes a huge difference in the long term.
Investment growth in long term
Now see if a Rs 5,00,000 investment is growing at 10 per cent annualised growth, what a 5- and 10-year difference can make in corpus.
If the amount is invested for 35 years, estimated capital gains will be Rs 1,35,51,218, and the estimated corpus will be Rs 1,40,51,218.
Investment growth in long term
If the amount invested for 30 years, estimated capital gains will be Rs 82,24,701, and the estimated corpus will be Rs 87,24,701.
If the amount invested for 25 years, estimated capital gains will be Rs 49,17,353, and the estimated corpus will be Rs 54,17,353.
Rs 2 lakh investment vs Rs 10 lakh investment
Now, here is an example of how a Rs 2,00,000 investment can create a corpus larger than the one created from a Rs 10,00,000 investment in the long term if both grow at a 12 per cent annualised return.
If a Rs 2,00,000 investment is made for 35 years, it will give estimated capital gains of Rs 1,03,59,924 and the estimated corpus of Rs 1,05,59,924.
Rs 2 lakh investment vs Rs 10 lakh investment
If a Rs 10,00,000 investment is made for 20 years, it will give estimated capital gains of Rs 86,46,293 and the estimated corpus of Rs 96,46,293.
This is how you can see that a smaller investor can create a larger corpus if they get more years of compound growth compared to a larger investment.
How long-term investment can benefit
Now, going by the same logic, an investor can create a Rs 5 crore corpus at a 12 per cent annualised return with a smaller one-time investment if they get more years of compounding.
If one wants to build a Rs 5 crore investment from a Rs 10 lakh one-time investment, they can create it in approximately 35 years.
How long-term investment can benefit
But if they want to create it in 25 years, their estimated one-time investment should be Rs 29,41,200.
The estimated investment is 3 times larger because of 10 years of less compound growth.
Calculations for story
In the story, we will show how many years, a Rs 4,50,000 one-time investment can grow to over Rs 3,00,00,000 if the annualised return is 12 per cent. We will show this growth in different phases.
Corpus from Rs 4,50,000 investment in 10 years
In 10 years, estimated capital gains will be Rs 9,47,632, and the estimated corpus will be Rs 13,97,632.
Corpus from Rs 4,50,000 investment in 20 years
In 20 years, estimated capital gains will be Rs 38,90,832, and the estimated corpus will be Rs 43,40,832.
Corpus from Rs 4,50,000 investment in 30 years
In 30 years, estimated capital gains will be Rs 1,30,31,965, and the estimated corpus will be Rs 1,34,81,965.
Corpus from Rs 4,50,000 investment in 38 years
In 38 years, estimated capital gains will be Rs 3,29,30,849, and the estimated corpus will be Rs 3,33,80,849.