Have focused on Expenses, its now time to focus on the Spending again but wisely on the Investments. Thumb rule of investing is “Save at-least 10% of your income ”. Start investing as early as possible however little it may be. This is to due to the “Power of Compounding”
When you save Rs 100 and get an annual interest of 10%, you will have Rs 110 at the end of one year. Due to compounding the next year you will get a 10% interest on Rs 110, which will then leave you with Rs 121. The next year, interest will be calculated on Rs 121 at 10% and so on. In time, these savings will grow exponentially.
If you set aside a sum of say Rs 5,000 every month from the age of 25, at a return interest rate of 10%, in 60 years you will have with you funds worth about a crore and more.
However, if you start at 40 with the same amount and return rate of interest, the retirement fund will amount to only around 33 L. That is a huge difference, the 40 year old individual would need to invest several multiples of Rs 5000 to be able to catch up!
I am putting these figures just as an illustration to show the impact of starting early. So start Investing early
When you save Rs 100 and get an annual interest of 10%, you will have Rs 110 at the end of one year. Due to compounding the next year you will get a 10% interest on Rs 110, which will then leave you with Rs 121. The next year, interest will be calculated on Rs 121 at 10% and so on. In time, these savings will grow exponentially.
If you set aside a sum of say Rs 5,000 every month from the age of 25, at a return interest rate of 10%, in 60 years you will have with you funds worth about a crore and more.
However, if you start at 40 with the same amount and return rate of interest, the retirement fund will amount to only around 33 L. That is a huge difference, the 40 year old individual would need to invest several multiples of Rs 5000 to be able to catch up!
I am putting these figures just as an illustration to show the impact of starting early. So start Investing early
Comments