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Many people save money only if something is left after paying for rent, milk, groceries, transportation, phone bills, movies, dining, and shopping.
But isn’t this a major mistake? Instead, saving between 10% and 30% of one’s monthly take-home salary should be non-negotiable.
For instance, if someone takes home ₹50,000 after deductions like PF and taxes, shouldn’t they first set aside ₹5,000 to ₹15,000 for their future financial needs? Only the remaining amount should be allocated for household expenses.
Isn’t securing tomorrow just as important as managing today? Many believe that investing means accumulating a large sum and then putting it into a scheme.
But isn’t this a major mistake? Just like small drops make an ocean, investing a small amount every month can grow into substantial wealth over time.
How Does Compounding Help in Wealth Creation? Compounding reinvests your returns, generating earnings on previous earnings. Over time, this exponential growth significantly boosts your investment value.
For instance, let’s say someone starts investing ₹3,000 per month at the age of 30 and continues until 60. Over these 30 years, they would have invested a total of ₹10.80 lakh.
If this investment is made in an equity mutual fund yielding an average annual return of 12%, wouldn’t it grow to ₹1.06 crore? Is it really possible to accumulate ₹1.06 crore by investing just ₹3,000 per month?
Yes. If you invest ₹3,000 monthly in an equity mutual fund with an average return of 12% per annum for 30 years, compounding can help grow your corpus to ₹1.06 crore.
On the other hand, if invested in a fixed deposit or a debt mutual fund with an 8% annual return, it would generate ₹8.48 lakh in interest , roughly ₹70,665 per month. Wouldn’t that ensure a financially secure retirement?
Increasing your monthly SIP amount accelerates wealth creation. For example, investing ₹5,000 per month at 12% could yield approximately ₹1.76 crore in 30 years.
Saving at least 30% of one’s monthly income is essential. After all, isn’t this what will help cover future financial needs like children’s higher education and marriage? Today’s savings are tomorrow’s security, shouldn’t everyone realize this?
Final Takeaway
Small, consistent investments can build a fortune over time. By prioritizing savings and investing wisely, securing a financially stress-free retirement isn’t just possible—it’s inevitable. Start early, stay disciplined, and let compounding work its magic!
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