Mutual Fund: In this era of Digital India, it is quite easy to start investing in mutual funds. In today’s time, there are many such online SEBI registered platforms, through whose app you can start investing by completing KYC (Know Your Customer) in a few minutes.
Mutual Fund: A big fund of mutual funds is that the sooner one starts investing from the long-term perspective, the more it helps in wealth creation. Compounding has tremendous benefits in the long run. Therefore, a delay of 2-5 years in starting your investment could result in a loss of your estimated fund by lakhs of rupees. In this era of Digital India, it is quite easy to start investing in Mutual Funds. In today’s time, there are many such online SEBI registered platforms, through whose app you can start investing by completing KYC (Know Your Customer) in a few minutes. In this, investment can be started with just Rs 100 monthly.
Understand the benefits of investing early with an example
Yash and Arya (fictitious name) are both college friends. Both invest in SIP. The difference is that Arya started a monthly SIP of Rs 1,000 from the age of 20. Whereas, Yash took this decision at the age of 25. However, both now invest Rs 1,000 monthly with a long-term perspective. He has decided to continue this investment till the age of 50.
Now look at the calculation…
Continuing to invest in Mutual Fund SIPs over a long period, the annual average return has been 12 per cent. According to the SIP calculator, if Arya’s monthly SIP of 1,000 continues till the age of 50, ie for the next 30 years, and returns 12 per cent annually, then his estimated corpus will be Rs 35.29 lakh. In this, Arya’s total investment will be Rs 3.6 lakh and estimated wealth gain will be Rs 31.7 lakh.
On the other hand, if Yash’s SIP of Rs 1,000 also lasts for 50 years, his estimated corpus would be around Rs 19 lakh at an average return of 12 per cent per annum. In this, Yash’s total investment is 3 lakhs and the estimated wealth gain is Rs 16 lakhs. That is, the estimated fund of Yash is about Rs 16.29 lakh less than that of Arya. This is because Yash started investing after 5 years. Whereas there is a difference of only 60 thousand rupees in the total investment amount of both.
| Starting Age | Ending Age | Amount/Month | Total Investment | Rate of Return | Final Value | |
| Arya | 20 | 50 | ₹1,000 | ₹3,00,000 | 12% | ₹ 35.29 lakh |
| Glory | 25 | 50 | ₹1,000 | ₹3,60,000 | 12% | ₹18.97 lakh |
(This chart is for an estimate. The final value may be higher or lower depending on whether the annualized return is higher or lower.)
Deepak Jain, Head (Sales) Edelweiss Mutual Fund says, “It is always better to start investing early. Starting investing early in your career can lead to substantial wealth creation through compounding. Jain says, in the initial days, if you start investing by looking at your small and big financial goals like travel, car, buying a house, then achieving it is also easy. It is clear from the above example how a delay of just 5 years reduces the estimated wealth creation by Rs 16.29 lakh.
(Disclaimer: Here is a calculation of mutual funds. This is not an investment advice. Investing in mutual funds is subject to market risks. Before making an investment decision, please consult your financial advisor.)
