Focus more on Saving or making Returns? Let's settle this.
Everyone you meet must be either focused on telling you to save more and not worry about returns, or focus on making higher returns with lower corpus. But which one is the most efficient and best route?
Let's settle this once and for all. Save more rather than focus on returns.
Well, we have statistical backing to support this.
You might have heard that even a mere 1% return can have drastic effects on your portfolio over the long run, right? And that's true.
E.g.: If you are investing 25,000 a month, then over a 30 year period:
With an 11% return, your corpus: ~INR 61,87,171
With a 12% return, your corpus: ~INR 80,24,979
Yup. That's huge. But how much control can we exercise over returns? Negligible right?
A surer way of creating a larger corpus is to get aggressive with your savings and not returns. This sounds basic but is quite powerful.
Let's say you are investing ₹25,000 each month. That comes to ₹3 lakhs yearly. With a yearly investment of ₹3 lakhs and 16% returns, you will end up with ₹3.46 crores at the end of 20 years.
What if you invest ₹3.6 lakhs for 20 years at 16%? You will have ₹4.15 crores.
And finally, if you increase your investments of ₹3.6 lakhs by 10% each year, for 20 years at the same returns, you end up with ₹7.63 crores.
And if you invest for just one more year, this goes up to ₹4.04 Cr, ₹4.85 Cr and ₹9.10 Cr.
Here's a visual on the same:
Cheers!
Mid-Week Wisdom:
“The scene changes, but the outcomes don't.” — Joys of Compounding
If you want to know about something related to finance, or have any queries:
Please drop us an email: advisoira@gmail.com
Create your financial plan in less than 3000 Rupees: Visit Website