How to enhance the power of your own money-The power of compounding.
Let’s begin with these examples a) what can one do with return of Rs 100/- on an investment Rs 1000/- @ 10% or Rs. 10000 on an investment of Rs 100000/- @ 10%? Though the return is the same 10% the size of the money coming back is different so a lot can be done if my situation falls in the case of the larger investment.
Same way a disciplined and a systematic investment over a longer period of time will fetch you more returns than any thing else
Money invested Rate of return Time Total after the period You invested You earned
Rs. 1000/- 10% 5 yrs 78082/- 60000/- 18082/-
Rs.1000/- 10% 10 yrs 206552/- 120000/- 106552/-
Rs.1000/- 10% 15 yrs 417924/- 180000/- 237924/-
Rs.1000/- 10% 20 yrs 765696/- 240000/- 525696/-
So the longer I go the better and better money is created from my investment.
So the learning here is
1) I need to have a large sum of money to create a larger pay back kitty. (The fact is that’s the reason why we are here for; if all was ok we need not have these problems.)
2) I give time for my money to grow over a certain period of time and I maintain a good discipline while doing so. Besides investing in a disciplined manner. This is more of a possibility that can be achieved.
3) I should have a higher return which again is not easy to get.
The fact emerging from here is your money has the power to slowly and surely become stronger over a period of time albeit the discipline is maintained. To rapidly enhance the growth of the money power, one could look to investing the money more aggressively for a few years. Aggressive would mean investing in equity or equity linked products where you could look for returns at least one and a half times of the rate of prevalent rate of interest.
More detailed investment strategy can be worked out in a detailed plan which is more individualist in nature. One just can’t make this part of the financial planning process a one glove fits all kind of plan. Hence this has to be dealt with separately.
However on fact remains to be experienced as the corpus grows in size there is a great sense of comfort. Nothing can replace the sense of security that prevails when one is aware of the fact that there is enough money stashed away in different places and are there in the difficult times to fall back on.
Same way a disciplined and a systematic investment over a longer period of time will fetch you more returns than any thing else
Money invested Rate of return Time Total after the period You invested You earned
Rs. 1000/- 10% 5 yrs 78082/- 60000/- 18082/-
Rs.1000/- 10% 10 yrs 206552/- 120000/- 106552/-
Rs.1000/- 10% 15 yrs 417924/- 180000/- 237924/-
Rs.1000/- 10% 20 yrs 765696/- 240000/- 525696/-
So the longer I go the better and better money is created from my investment.
So the learning here is
1) I need to have a large sum of money to create a larger pay back kitty. (The fact is that’s the reason why we are here for; if all was ok we need not have these problems.)
2) I give time for my money to grow over a certain period of time and I maintain a good discipline while doing so. Besides investing in a disciplined manner. This is more of a possibility that can be achieved.
3) I should have a higher return which again is not easy to get.
The fact emerging from here is your money has the power to slowly and surely become stronger over a period of time albeit the discipline is maintained. To rapidly enhance the growth of the money power, one could look to investing the money more aggressively for a few years. Aggressive would mean investing in equity or equity linked products where you could look for returns at least one and a half times of the rate of prevalent rate of interest.
More detailed investment strategy can be worked out in a detailed plan which is more individualist in nature. One just can’t make this part of the financial planning process a one glove fits all kind of plan. Hence this has to be dealt with separately.
However on fact remains to be experienced as the corpus grows in size there is a great sense of comfort. Nothing can replace the sense of security that prevails when one is aware of the fact that there is enough money stashed away in different places and are there in the difficult times to fall back on.
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