How many years can it take for a person to become a millionaire? The answer to this can be different for everyone. For employed people, it is like a dream. However, they too can achieve this dream with the help of compounding.
If your salary is less than a lakh rupees, then becoming a millionaire will definitely seem like conquering a fort. But you can do this in just 15 years with the help of compounding. For this, you have to remember the rule of 8-4-3. All the advice you will get related to investment usually has one thing in common and that is that you have been invested for a long time. This rule also works on the same principle.
When you invest money, its effect is not visible immediately, but with the passage of time its effect becomes clearly visible. This shows that patience is important in investing. Only investors who have patience take advantage of investing and see the amazing magic of compounding. With a little discipline and the power of compounding, you can easily increase your money manifold. Have you ever wondered how long it takes to earn Rs 1 crore? The answer depends on how much you invest and how much return you get on your investment. But earning Rs 1 crore is not as difficult as you might have thought initially.
Benefit of compounding
Compounding gives you the opportunity to earn returns multiple times on your initial investment. This increases your investment manifold. The amount that is formed by combining the returns received on the investments you make is reinvested. This is called compounding.
Rule of 8-4-3
By following the 8-4-3 rule of compounding, you can help your money grow faster. Let us understand with an example how this rule increases money. Suppose you invest Rs 20,000 every month in an instrument that gives 12% interest per annum. In this way you will earn Rs 32 lakh in eight years. The first Rs 32 lakh is earned in 8 years, but the next Rs 32 lakh is earned in just 4 years at the same interest rate. This way at the end of 12 years you will have an investment of Rs 64 lakh. Now if you leave it for another 3 years and continue investing Rs 20,000, then the amount you have collected in these years will increase from Rs 64 lakh to more than Rs 1 crore.
