Power of Rs 50,000 One-time Investment: In how many years, Rs 50,000 lump sum amount can grow to Rs 5 lakh, Rs 15 lakh, and Rs 25 lakh; see calculations
Power of Rs 50,000 One-time Investment: If you think that Rs 50,000 is a small amount to generate a significant corpus, let's revisit your thoughts. If one invests this amount and stays in their investment for a long time, the corpus generated from it can help you achieve financial goals. Know in how many years and at what rate of return, a Rs 50,000 investment can balloon to Rs 5 lakh, Rs 15 lakh, Rs 20 lakh, and Rs 25 lakh.
Power of Rs 50,000 One-time Investment: Most salaried-class individuals feel comfortable with monthly investment as it suits their earning cycle. But many times, people get cash in bursts that may come in the form of an office bonus, a gift from a family member, or return from an investment. They may use it to further invest in an instrument that can multiply their investment many times. For that, they don't need a large amount. Even if it is a few thousand or a few lakh rupees, and they invest it, the investment can grow to even 50 times or higher. Even a Rs 50,000 one-time investment can see exponential growth, where it can grow to a level where an investor may achieve many of their financial goals. Know how 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.)
Regular investment vs one-time investment
Both investments are good if one gives them sufficient time to grow. In regular investments, an investor deposits a fixed amount daily, weekly, monthly, quarterly, half-yearly, and yearly. Such investments are suitable for investors with a regular income at fixed intervals.
Regular investment vs one-time investment
In a one-time investment, investors invest the entire amount in one go. They may get this income from their office bonus, gift from a friend or family member, or return from an investment. If one has a small amount for a one-time investment and lets it grow for many years, even that small amount may help them accomplish many of their financial goals.
Power of one-time investment
Let's see two examples to see how a one-time investment can grow to a large corpus.
A 30-year-old person has got Rs 1,25,000 in the form of a bonus. Instead of spending this amount, they decide to invest it for their retirement needs. They expect a 12 per cent return from their investment.
Power of one-time investment
The amount till their 60th birthday can grow to an estimated Rs 37,44,990.
Another 30-year-old person has got Rs 10 lakh in inheritance. Considering it as an opportunity, they want to build their retirement corpus from it. They make a one-time investment, from where they expect a 13 per cent annualised return. Let's see how much estimated corpus they may create by the age of 60.
In 30 years, the estimated corpus generated from it will be Rs 3,91,15,898.
Power of compounding in one-time investment
Compound returns are returns on returns, which grow faster with time. So, when you invest Rs 1 lakh and get a 12 per cent annualised return on your investment, it may not appear to be creating a significant fund in 5 years, but in 25 years, it can your multiply wealth by multiple times.
E.g., in 5 years, Rs 1 lakh will become Rs 1,76,234, but in 25 years, it can grow to Rs 17,00,006.
Benefit of early investing
In the examples above, you can see that a 30-year person is creating a corpus many times larger than the principal because, in each case, they give sufficient time for their investment to grow. Had they started 10 years later, let's see the cost of delay they would have suffered.
Benefit of early investing
A Rs 1,25,000 one-time investment in 20 years would have been an estimated Rs 12,05,787.
On the other hand, a Rs 10 lakh investment in 20 years would have grown to an estimated Rs 1,15,23,088.
Calculations for story
In the story, we will see how many years a Rs 50,000 one-time investment at a 12 per cent annualised rate can grow to Rs 5 lakh, Rs 15 lakh, Rs 20 lakh, and Rs 25 lakh.
From Rs 50,000 investment to Rs 5,00,000 corpus
It will take approximately 21 years to achieve this target. Estimated capital gains during the investment period will be Rs 4,90,192, while the total estimated corpus will be Rs 5,40,192.
From Rs 50,000 investment to Rs 15,00,000 corpus
It will take slightly over 30 years to achieve this target. Estimated capital gains in the 30-year period will be Rs 14,47,996, while the total estimated corpus will be Rs 14,97,996
From Rs 50,000 investment to Rs 20,00,000 corpus
It will take approximately 33 years to achieve this financial goal. Estimated capital gains in the 33-year period will be Rs 20,54,577, while the total estimated corpus will be Rs 21,04,577.
From Rs 50,000 investment to Rs 25,00,000 corpus
It will take approximately 35 years to achieve this target. Estimated capital gains in the 35-year time frame will be Rs 25,89,981, while the total estimated corpus will be Rs 26,39,981.
What if one stays for 1 more year in investment?
In 36, years, estimated capital gains will be Rs 29,06,779 and the estimated corpus will be Rs 29,56,779.
Conclusion
We can see here that staying just 1 year extra can make a significant difference to your corpus. But that difference can be noticed only when the duration is long.