It's often said that a journey of a thousand miles begins with a single step. As you embark on the ambitious journey towards accumulating Rs 1 crore, it's crucial to chart your course now and take that crucial first step without hesitation. Initially, the idea of reaching the Rs 1-crore milestone may appear formidable, but with time on your side and the power of compounding at your disposal, you can boldly embrace this financial challenge. This phase of your working life is when you earn and save for retirement, and a substantial corpus ensures a comfortable retirement.
Why target Rs 1 crore initially? The sooner you reach this milestone, the faster you'll achieve your second and third crores. According to FundsIndia Research Report, if you invest Rs 70,000 per month at a 12% annual return rate, you can attain your first Rs 1.1 crore in a painfully long 8 years. Adding another 4 years will halve the time required for the second Rs 1.1 crore provided you keep investing Rs 70,000 per month, and the third Rs 1.1 crore can be achieved in only 3 years. This is the remarkable power of compounding, and by the 20th year, you'll be adding nearly Rs 1.1 crore every year to your wealth.
Similarly, if you invest Rs 50,000 every month, it will take a painstaking 8 years to reach your first Rs 80 lakh. However, it will take just 4 years for the second Rs 80 lakh and a mere 3 years for the third Rs 80 lakh.
As equities tend to give higher return over the long term you can consider investing through Systematic Investment Plan or SIP in large cap funds for generating a return of around 12 per cent. It's crucial to consider that the remaining time in your working life plays a pivotal role, as disposable income tends to be lower in the early years. Conversely, having more time allows for a more significant compounding impact. Once you've built your first crore, the returns on that amount also contribute to growth, underscoring the importance of achieving the proverbial "first crore."
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You can reduce the time span by continuously increasing your savings, particularly in the later stages. If you augment your savings every year, your target of Rs 1 crore can be reached much sooner.
Delaying action negates the benefits of letting your money grow independently, placing heavier reliance on increasing your savings contributions. Each year of delay escalates the required monthly investment amount, and excessive procrastination could render your investment target unattainable. Money requires time to flourish, and the true power of compounding manifests when sufficient time is available.