Mutual Fund

Small Steps towards Destination Make a Long Journey

Everybody wants to get an appraisal right? An employee wants a hike in his salary. A business owner wants a bigger profit from the product. A self-employed person wants more clients than now. So basically who doesn’t want to get more money? Then why are you being OK with your regular returns from your investments. Don’t satisfy yourself with regular return, because if you make small increase in your investment it would eventually make a big difference in your wealth generated from your investments.

       Another reason why you should increase your investment is inflation. The current rate of inflation in India is 6-8%, whereas the bank FD rates are lower than it!! In fact, even if we don’t consider the taxes, today by investing in FDs you are reducing your wealth!! So if you want to beat the inflation you need to get return above the inflation which is around 8%.

       Let’s take an example here, with the current rate of inflation of 8% if you need Rs.15,000/- Per month to live then after 40 years you would need Rs 3,25,000/- to live the same life.

       There are some examples to prove that small steps are very important in a long journey. If you are doing an SIP of Rs.20,000/- per month at the rate of 12% annual return, then you would need almost 15 years to accumulate  Rs.1 crore/-. But if we make a small change in investment, like if we increase our investment by 10% every year then it would take 12 years to generate Rs.1 crore/-. If we continue that investment for 15 years, it would be Rs. 1.66 crore/- which is quite impressive.

        Another example is, if you are making an SIP of  Rs.20,000/- per month at 12% annual rate for 30 years, it would be Rs.7.06 crore/- It means you would be a millionaire. But if you increase your investment by 10% every year. The result might shock you because you would get Rs.15.01 crore/-, which is almost double of the previous one. That means you would be a multi-millionaire!!! Don’t you want to be called a multi-millionaire???

Sometimes it has been noticed in several data that a minor change in your investment makes a huge margin and it can also beat inflation. So if you want to be secured in this world of constant inflation, you have to make your money healthier by making it more. Another reason is you should have patience and discipline to achieve maximum result in long term as one great economist has said,

If you want to achieve maximum returns from your investment, you don’t need to be wealthier than others, but you need to be more disciplined than others.”

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