The short answer, Who doesn’t like to be rich?
Before we answer the aforementioned query, let’s first consider the consequences of not investing. Let’s assume you make Rs. 60,000 per month and spend Rs. 30,000 on living expenses like accommodation, food, transportation, shopping, and healthcare.
Your monthly surplus is the remaining amount of Rs. 30,000.
Let’s not consider the impact of personal income tax for this example.
Here are a few assumptions:
If we apply these assumptions, here’s the cash balance in 15 years:
|Years||Yearly Income||Yearly Expense||Cash Remaining|
|Total Cash After 15 Years|
Here are the takeaways:
But is that enough? Lets see how you will fare if you decide to invest in an investment option that grows at 1% annually instead of keeping it idle.
For instance, if you retained Rs. 360,000 in the first year and invested it. At Rs. 12% annually for 15 years, the result would be Rs. 1,759,360 at the end of the 15th year.
|Years||Yearly Income||Yearly Expense||Cash Remaining||Retained Cash Invested 12% pa|
|Total Cash After 15 Years||55899247|
Your cash balance has considerably increased as a result of your decision to invest the extra money. From Rs. 1.14 crore, the cash balance has increased to Rs. 5.58 crore.
Now, coming back to our question on why one should invest. Here are a few valid reasons to consider:
In a nutshell, it is very essential to start investing as early as possible to reap the maximum benefits.