Today we are telling you the 8-4-3 investment rule. Every mutual fund investor must know this rule. This will help you in creating a big fund and you will be able to get maximum returns by investing in the right way.
Investors are scared due to the ongoing decline in the stock market. However, if you are a mutual fund investor and your goal is to create a big corpus in the long run, then there is no need to worry. You continue your investment. The benefit of compounding in mutual funds is available only in the long run. One of the many important conditions to succeed as an investor is to have patience to see your investment grow slowly in the initial stage and to take advantage of compounding in the later years. Mutual funds also use compounding to increase the money of investors over time. Today we are telling you the 8-4-3 investment rule. Every mutual fund investor must know this rule. This will help you in creating a big fund and you will be able to get maximum returns by investing in the right way.
What is the 8-4-3 Investment Rule?
The 8-4-3 Investment Rule shows how any financial goal can be achieved through the power of compound interest. It is a concept that can be used to help your investments grow over time. It is not a specific investment strategy, but a simple way to understand the potential pace of growth.
How does the 8-4-3 rule of compound interest work?
Take an example of how money grows with this rule: Suppose you invest Rs 20,000 every month in a mutual fund scheme that pays 12% interest per annum. Assuming this is compounded interest annually, you will accumulate Rs 32 lakh in eight years. The first Rs 32 lakh is made in 8 years, but the next Rs 32 lakh will be accumulated in just 4 years at the same interest rate. So, at the end of 12 years, a monthly investment of Rs 20,000 in an investment scheme will make it Rs 64 lakh.
When this amount is left for the next 3 years and at the same time Rs 20,000 per month is continued to be invested, this amount will become Rs 1 crore.
Your investment can follow this growth pattern:
- Initial Growth (Year 1-8): Steady growth in your investment during the first eight years.
- Accelerated Growth (Year 9-12): In the next four years, your investment experiences the same growth as it did in the first eight years.
- Exponential Growth (Year 13-15): In the last three years, your investment again experiences growth equal to the previous four years.
- By following this rule, you can easily accumulate a big amount of money.
