This was the first lesson my grandmother taught us. We have big joint family and lots of kids in the home. Every kid had a separate piggy bank that was safeguarded in the grandmothers cupboard. It was in those early days we use to get lots of gifts during Diwali or birthdays or on some special occasion. But the seed fund was provided right at the time of birth and all the childs money is saved separately. All this money was collected by all the kids and put in there piggy bank and everybody really tried to increase there AUM :-) in a piggy bank. As years progressed we started getting pocket money and awards on various achievements in schools etc. This investment grew slowly and slowly into near about lacs by the time we achieved adulthood.
My dad told me once that he has kept just Rs. 100 for his grandchild in FD. I said "sau rupaiya mein kya hoga dad". He asked what do you think this Rs.100 will be in 50 years I said maybe one thousand or at most 2 thousand. he asked me again what will it be in 100 years. I said maybe 5 thousand at the most. He explained me with following table saying that if you invest your money in FD which gives a return of 9% year on year. Its like doubling your investment every 8th year.
1 year = Rs. 100
8 year = Rs. 200
16 year = Rs. 400
24 year = Rs. 800
32 year = Rs. 1,600
40 year = Rs. 3,200
48 year = Rs. 6,400
56 year = Rs. 12,800
64 year = Rs. 25,600
72 year = Rs. 51,200
80 year = Rs. 102,400
88 year = Rs. 204,800
96 year = Rs. 4,09,600
108 year = Rs. 8,19,200
Look at the power of compounding its exponential rise. Just Rs. 100 can make you a lakhphati.
Now if you take a look at average returns of any diversified equity mutual fund for last 10 years Its MORE then 15%. Let us safely assume an average return of 15% which means roughly doubling your money every 5 year.
1 year = Rs. 100
5 year = Rs. 200
10 year = Rs. 400
15 year = Rs. 800
20 year = Rs. 1,600
25 year = Rs. 3,200
30 year = Rs. 6,400
35 year = Rs. 12,800
40 year = Rs. 25,600
45 year = Rs. 51,200
50 year = Rs. 102,400 (Lakhpati)
55 year = Rs. 204,800 (Lakhpati)
60 year = Rs. 4,09,600
65 year = Rs. 8,19,200
70 year = Rs. 16,38,400
75 year = Rs. 32,76,800
80 year = Rs. 65,53,600
85 year = Rs. 1,31,07,200 (crorepati)
90 year = Rs. 2,62,14,400
95 year = Rs. 5,24,28,800
100 year = Rs. 10,48,57,600 (More then 10 crores)
Its amazing, its awesome, I feel like dancing once I complete 100 years :-)
But the point is maybe not 100 years not 50 years but you can definitely plan for your retirement and you can save at least Rs 100 per month for 20 years or more and you will end with handsome money when you retire.
Thats what I call Financial Independence !!
Source :
http://www.mfexpert.com/2008/04/crorepati-with-just-rs-100.html
Source :
