Wednesday, October 12, 2016

What Investment Results to Expect for Rs.25000 per month

Actual Question:

What are the best investment options if I can allot Rs.25, 000 every month for a period of 10 years?
I am a single male, currently 27 years old, living abroad and would like to have returns when I am 40. Please provide options where I don’t want to spend my time much (ex: stock market) but get maximum returns. Thank you in advance.


Dear Friend!
Your current age is especially favourable to earn very good returns over a long period of time, without having to spend any time at all.
Please invest the sum of Rs.25,000/- every month in a well diversified index fund .
However your investment horizon of just thirteen years is insufficient to produce spectacular results. Please understand that in investing it is really not the accumen that produces results, rather it is time - very very long time. Over such long periods of time the universal law of the ‘Miracle of Compounding’ will work for you and produce extraordianry results.
Here I present what results can be expected over 13 year and 33 years investing periods for the same Rs.25,000/- per month.

From the above it can be seen that while the investment period has approximately merely trebled, the corpus after compounding has gone up by about 50 times. This is the power of compounding over very long periods of time.
In the above example the returns from stock markets are assumed at 15% per annum and inflation at 10% which is on the higher side in the present circumstances.
I am sure you have already decided to extend the investment horizon to 33 years?
Thank you,