Compound Returns: How 3% additional returns can take Rs 1.83 cr corpus to Rs 5.52 cr in 5 years
Combined Returns: When we make certain investments, our goal is to get a high return on them. In order to get high returns, you need to have the right investment strategy, a good mix of investment options, and the ability to continuously update the strategy.
A one percent increase in returns may not be a significant factor in the short term, but in the long run, even a 0.5 percent return is significant.
Eg, if A and B invest Rs 5,000 every month in a mutual fund SIP for 5 years and get 12 percent and 14 percent returns, respectively, on it, their average investment at that time will be Rs 4, 05,518, and Rs. 4,26,080, respectively.
But if they continue with it for 20 more years, their estimated value will be Rs 85,11,033 and Rs 1,17,23,201, respectively.
It happens because the compounding of returns shows a cumulative effect over time, and even an additional 1 percent of returns can help the human body grow exponentially.
In this write-up, we will tell how an additional 3 percent return for 5 additional years can take one’s corpus from Rs 1.83 crore to Rs 5.52 crore.
Investment conditions
We will take the example of a monthly SIP of Rs 20,000, where the expected annual return will be 12 percent.
The investment period will be 20 years. In the following two cases, the monthly SIP investment will remain the same.
In the second scenario, we will show what would be a corpus with a return of 15 percent every year for 20 years.
In the third scenario, we will show what would be a corpus with an annual return of 15% for 25 years.
Corpus on Rs 20,000 monthly SIP investment for 20 years (at 12% return)
In this case, the amount invested will be Rs 48,00,000, the estimated profit will be Rs 1,35,97,147, and the estimated profit will be Rs 1,83,97,147.
Corpus on Rs 20,000 monthly SIP investment for 20 years (at 15% return)
The estimated capital gain in such a case would be Rs 2,17,41,469 and the target target would be Rs 2,65,41,469.
Corpus on Rs 20,000 monthly SIP investment for 25 years (at 15% return)
If the person continues the investment for another 5 years, his additional investment during that period will be Rs 12,00,000, but his estimated capital gains in 25 years will be Rs 4,91,31,216, and the estimated capital will be Rs. -Rs 5, 51,31,216.
