Retirement Planning by One-time Investment: How can Rs 4,44,444 one-time deposit create fund of Rs 1,50,00,000 in long term?
Retirement Planning by One-time Investment: Investment duration is an important factor in wealth generation. One can see their investments increase by multiple times if they let them grow in the long run. A Rs 4,44,444 one-time investment may spring to nearly Rs 1.50 crore corpus in the long duration. The power of compounding may help this investment grow by more than 33 times! In how many years? Know here-
Retirement planning by one-time investment, power of comounding: Do you dream of your investment being multiplied by more than 30 times? It may just not be your dream; it may be reality, but for that, one must consider that it won't happen by any magic. In the world of investment, your investment can be multiplied by more than that! But for it, you have to have the patience to see it grow steadily. If one gives sufficient time for their investments to grow, the results may appear to be surreal for sure. A Rs 4,44,444 one-time (lump sum) investment in a mutual fund scheme can balloon to nearly Rs 1,50,00,000! But how many years may it take? See calculations to know!
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(Disclaimer: This is investment advice. Do your due diligence or consult an expert for financial planning.)
Importance of investment
Every one of us has some financial goals to meet in life. It may be purchasing an appliance, a vehicle, or a home. It may be in the form of our marriage, child education, or their marriage. For every financial goal, you may require a substantial amount. But you may not have that amount in your account or in the form of an asset. For that, you need to invest in schemes which grow to help you meet financial goals.
Periodic investment
Most of us have a monthly earning cycle, where the more suitable thing can be to invest monthly. Some people may also have a daily or weekly earning cycle. For them, periodic investments of that range can be more suitable.
One-time investment
Sometimes, we may have a large sum in the form of an office bonus, windfall, property share, etc. In such a case, we may opt for a one-time investment. One may also do a mix of periodic and one-time investment.
Power of compounding in investment
Since one may get returns on their returns, the power of compounding can multiply their investments in the long run, be it a one-time or periodic. The longer the investment duration, the larger the corpus can be.
Power of compounding in periodic investment
Let's see how the power of compounding may work in periodic investments, such as monthly. A person starts a Rs 12,000 monthly SIP, where they expect a 12 per cent annualised return. Let's see how their investment may grow in 12, 24, and 36 years.
In 12 years, the investment will be Rs 17,28,000, estimated capital gains will be Rs 19,69,147, and the estimated corpus will be Rs 36,97,147.
Power of compounding in periodic investment
In 24 years, investment will be Rs 34,56,000, estimated capital gains will be Rs 1,46,45,144, and the estimated corpus will be Rs 1,81,01,144.
In 36 years, the investment will be Rs 51,84,000, the estimated capital gains will be Rs 6,90,34,768, and the estimated corpus will be Rs 7,42,18,768.
Here, you can see how the corpus is growing faster every 12 years because of the power of compounding.
Power of compounding in one-time investment
Here, let's see that if you invest Rs 6,00,000 one time in a mutual fund scheme where the annualised return is 12 per cent, here's how your corpus may grow in 12, 24, and 36 years.
In 12 years, estimated capital gains will be Rs 17,37,586, and the estimated corpus will be Rs 23,37,586.
Power of compounding in one-time investment
In 24 years, estimated capital gains will be Rs 85,07,177, and the estimated corpus will be Rs 91,07,177.
In 36 years, estimated capital gains will be Rs 3,48,81,344, and the estimated corpus will be Rs 3,54,81,344.
One-time investment for retirement corpus
In the example, you can see how the corpus may grow in the long run. So, if one makes a one-time investment in their early or mid-20s, they may generate a sizeable corpus by one-time investment even when their investment amount is not extraordinary.
Examples of retirement corpus by one-time investment
Let's assume you are 25 and want a Rs 5 crore corpus till the retirement age of 60. How much one-time investment amount you may need if your annualised rate of return is 12 per cent, 13 per cent, and 14 per cent?
At a 12 per cent annualised return for 35 years, you may achieve the target of a Rs 5 crore retirement corpus with a Rs 9,50,000 one-time investment.
Examples of retirement corpus by one-time investment
At a 13 per cent annualised return for 35 years, you may achieve the target of a Rs 5 crore retirement corpus with a Rs 6,93,800 one-time investment.
At a 14 per cent annualised return for 35 years, you may achieve the target of a Rs 5 crore retirement corpus with a Rs 5,10,000 one-time investment.
Here, you can see how time and the rate of return can multiply your investment in the long run.
Calculations for story
In the story, we will show that in how many years your Rs 4,44,444 one-time investment may create a retirement fund of approximately Rs 1,50,00,000. For calculations, we will take 12 per cent as the annualised rate of return from the lump sum investment.
Retirement corpus from Rs 4,44,444 one-time investment in 10 years
In 10 years, estimated capital gains will be Rs 9,35,932, and the estimated corpus will be Rs 13,80,376.
Retirement corpus from Rs 4,44,444 one-time investment in 20 years
In 20 years, estimated capital gains will be Rs 38,42,793, and the estimated corpus will be Rs 42,87,237.
Retirement corpus from Rs 4,44,444 one-time investment in 30 years
In 30 years, estimated capital gains will be Rs 1,28,71,064, and the estimated corpus will be Rs 1,33,15,508.
Retirement corpus from Rs 4,44,444 one-time investment in 31 years
In 31 years, estimated capital gains will be Rs 1,44,68,925, and the estimated corpus will be Rs 1,49,13,369.