Share

Team LXME

Steps To Make Your Money Work For You

In the second part of our five-part series on investments, we’ll discuss the best time to invest and whether there really is a ‘right’ or ‘wrong’ time for it. In the last post, we touched upon the concept of compounding, which is almost like magic. Gains get reinvested, earning more gains and so on, kicking off a cycle of earning. At some point, you can just sit back and let your investments do all the work for you! There’s a catch, though. It takes years for compounded gains to add up to any substantial amount. This is where starting early makes a difference, since the same sum will earn you more if it’s invested earlier.

LET’S LOOK AT A BASIC EXAMPLE OF THIS CONCEPT:

Nishi opens a 10-year recurring deposit account that offers 8% interest per annum, compounded quarterly. By putting in as little as Rs. 500 every month, Nishi earns almost Rs. 32,000 in interest and receives just under Rs. 92,000 upon maturity:

Recurring Deposit Return Chart

Here’s another example to consider: Shalini receives a cheque for Rs. 10,000 as a gift on her 20th birthday. Instead of spending this money or stashing it in her savings account, she invests in a 10-year fixed deposit that offers 8% interest per annum, compounded quarterly. By her 30th birthday, this FD will have more than doubled in value, earning over Rs. 12,000 in interest:

FD Returns Chart

If the same amount had been invested five years later, Shalini would have earned less than Rs. 5,000 in interest by the time she turns 30. The only difference in these two scenarios is the amount of time her money has had to grow. This is just the tip of the iceberg.

Imagine what happens over two or three decades, with investments that offer even higher rates of return. So, the answer to the question ‘when should you invest?’ is NOW. Don’t wait any longer. Yesterday would have been better, but it’s never too late (or too early) to start investing. Put your money to work right away!

New Investor? Request a Callback.

Fill in your details and we will guide you at every step

    other blogs
    Open Ended vs. Close Ended Mutual Funds: What’s the Difference
    Smart Money March 28, 2024
    Open Ended vs. Close Ended Mutual Funds: What’s the Difference

    Are you Surprised to know that there are different types of mutual funds? Confused about the difference between them? And wondering which one to invest in? Well, let us explain! Mutual funds are of two types: open ended and closed ended funds. As you read on, we’ll discuss the difference between open ended and closed Open Ended vs. Close Ended Mutual Funds: What’s the Difference

    By Abhibyakti Singh
    Share
    Gold Mutual Funds vs Gold ETF: Understand the Difference
    Smart Money
    Gold Mutual Funds vs Gold ETF: Understand the Difference

    The love story between women and gold is well known. For years, women have bought gold jewelry and stored them but since then smarter and better options for gold investment have emerged and women now have the opportunity to invest in their favorite asset with ease and without the fear of theft. Two such options Gold Mutual Funds vs Gold ETF: Understand the Difference

    By Abhibyakti Singh
    Share
    Smart Money March 20, 2024
    Mahila Samman Savings Certificate Scheme [Complete Guide]

    We can all agree that women are good savers! For years, they have been saving in nooks and corners of their homes and secretly setting aside money for their dreams & goals. In 2023, the Government of India introduced the post office mahila scheme i.e. Mahila Samman Savings Scheme a woman-oriented savings scheme to encourage Mahila Samman Savings Certificate Scheme [Complete Guide]

    By Abhibyakti Singh
    Share