A monthly investment of Rs 50,000 can help you accumulate Rs 8 crore. Heard about the '8-4-3' hack?

Understanding the power of consistent investment, compounded returns, and time can have a profound effect on your wealth-building journey. A classic application of this understanding can be seen when investing Rs 50,000 every month at an annual return of 12%.

An interesting observation in this scenario is the '8-4-3' rule.  Interestingly as per FundsIndia report, it takes the longest time, eight years, to reach your first Rs 80 lakh.

The second Rs 80 lakh takes significantly less time, only four years, and the third Rs 80 lakh comes in even less at just three years.

This acceleration of wealth accumulation is driven by the power of compound interest, where returns generated are reinvested to generate more returns. 

Over time, the contribution from compounded returns eclipses the contribution from the initial investments.

Consider this: In the case of your first Rs 80 lakh, about 61% would come from your own money, while 39% would be contributed by returns. Fast forward about four years to when you have Rs 1.6 crore, almost 70% of it would have been contributed by returns, with only 30% coming from your systematic investments.

This trend of increasing returns contribution continues with time, as by the time you reach Rs 2.4 crore in around 14 years and 9 months, returns contribution would have increased to 80%. 

Even more striking is that when you reach Rs 8 crore in nearly 24 years, 94% would be from returns, leaving a mere 6% from your initial investment.

Considering that equities generally offer higher returns over the long term, one option is to invest through a Systematic Investment Plan (SIP) in an index-based ETF (Exchange Traded Fund), large-cap mutual fund or flexi-cap funds, aiming for a return of approximately 12 percent. 

It's essential to factor in the remaining time in your working life, as disposable income tends to be lower in the initial years. However, having more time allows for greater compounding impact. As you accumulate your first crore, the returns on that amount also contribute to growth, highlighting the significance of reaching this milestone.

This serves as a testament to the power of compound interest and regular investments, underscoring the importance of consistency and patience when seeking to grow wealth over the long term. It's not just about how much you invest, but how long you let it grow. After all, time in the market almost always trumps timing the market. It's a lesson about the value of patience, discipline, and perspective when it comes to long-term investing.