Investment: Everyone dreams of becoming a millionaire. But, only one in a thousand steps in that direction. Do you want to be part of it and save Rs. 1 crore in a short time? However, the target can be reached with the 8-4-3 rule. Find out how now.
Investment: Do you dream of becoming a millionaire? But this is for you. To save crores of rupees in a short time you have to follow a rule. That way you can reach your goal easily. Same 8-4-3 rule. How much are you investing to earn crores of rupees? Keep in mind that it depends on how long you are investing. However, it is not that difficult. With a disciplined approach, compounding interest can multiply your investment over the long term. Now let’s find out how.
8-4-3 Compounding Rule
Simple interest rate is calculated only on your investment. Compounding is calculated on your investment plus the interest earned on it. Compound interest is a method of paying interest on the interest you have already earned. All you have to do is follow the 8-4-3 rule to grow your investment fast. Let us try to understand this through an example. Let’s say you invest Rs.21,250 per month in an investment route that earns an average return of 12 percent annually. If compound interest is applied annually, you will get Rs.33.37 lakhs in 8 years. This is where the magic of compound interest works. Now in just 4 years later Rs.33 lakhs will come. Also after that it will take only 3 years to deposit Rs.33.33 lakhs. A total of Rs.1 crore will be deposited in your account in 15 years. Also if you invest for another six years i.e. till 21st year your corpus will become Rs.2.22 crores. That means your Rs. Only 6 years are enough for 1 crore to become Rs.2 crore. On reaching the 22nd year, another Rs.33 lakh will come. By compounding like this, your investment will grow manifold. 8-4-3 simple format..
- The monthly SIP amount is Rs.21,250
- After 8 years the corpus is Rs.33.76 lakhs
- After 4 years (total 12 years) Rs. 66.24 lakhs
- After 3 years (total 15 years) Rs. Rs.1.02 crores
Mutual Funds Systematic Investment Plans can be said to be the right way to invest in equity markets. In the last 5 years, the Sensex TRI has returned 15.3 percent. Market experts say that this level of return can be expected when investing for a long period of time. Also, 13.5 percent returns in the last 10 years, 13.2 percent in 15 years and 13.39 percent in 20 years have been received on investments through SIP.
