Three friends Mr. Cautious, Mr. Responsible, and Mr. Fun aged around 50 meet up after a long time in the Alumni Club. After the usual chats on the good old days, the discussion turned towards investing habits. Mr. Cautious boasted of his saving and investment habits and said "I have been been saving since my age 30". Mr. Responsible said "I enjoyed my life a lot and started my savings once I started my family at 35". Mr. Fun said "I am always fun loving and happy and actually started my savings only at 40 years after my family and friends persuaded to do so".
Now, let's for a moment assume, three of them put Rs. 1 Lac each in an avenue which gave them about 15% returns per annum.
Mr. Cautious starts his investment at the age of 30; Mr. Responsible starts at the age of 35; Mr Fun starts at the age of 40.
At 50 during the time of their get together, can you imagine what kind of money each one of them would have made?
Mr. Cautious put Rs 1 lac at his age 30 and at his 50, he accumulated
Rs. 16,36,900
Mr. Responsible put Rs 1 lac at his age 35 and at his 50, he accumulated
Rs.8,13,800
Mr. Fun put Rs 1 lac at his age 40 and at his 50, he accumulated
Rs.4,04,600
Result: Mr. Cautious with the identical capital and returns of the other two, made two times more of Mr. Responsible and 4 times more of Mr. Fun and the difference is made in the matter of 5 and 10 years.
Mr. Responsible still made two times more of Mr. Fun.
Moral of the story:
Start your saving early and invest it at the earliest....
The power of compounding is at work very silently.....
This is a very good post Mr. Gopal. I appreciate your efforts for this blog.
ReplyDeleteI think if you provide us with some more examples like, in this post you focussed on early savings along with this if you can suggest some of the best ULIPs, SIPs or other ways it would be very helpful for us and at the same time it will be an excellent marketing and brand building opportunity for your bisuness.
Looking forward for great posts.