Invest Rs.5000 pm & dream big

To become a Karodpati is a dream for the lower middle class today. Fifty years ago, Telugu people used to dream about becoming a Lakshadikari. Today, making Rs.1 crore is not at all difficult, say those in the equity market. Just invest Rs.5,000 a month for 25 years, and you would end up bagging Rs.1 crore. This would be possible for the newly employed in their late 20s and early 30s. They suggest one should weigh the options. They would find the equity market as the first option. A return of 15% on investment is possible on the equity market as compared to bank interest on fixed deposits. They point out that the equity market returned 15%+ for 5 years during the decade 2005 and 2015. Sensex shows the interest return on the equity market as follows: 2006 16% 2007 19% 2008 12% 2009 13% 2010 18% 2011 17% 2012 19% 2013 14% 2016* 10% *(upto December 16) Based on this 15% average, if one were to invest Rs. 6,679 every month for 20 years from now, one could be a karodpati by 2036. (It's a different story what the value of Rs. 1 crore would be 20 years hence). If one is conservative and expects 10% return only on investment, one should be prepared to invest Rs. 13,168 per month for 20 years to achieve the target of Rs.1 crore. In any case, if one is to invest Rs.5,000 every month for 10 years @15%, you would get Rs. 13.76 lakhs. If the amount of Rs.13.76 lakhs were reinvested as as one-time deposit for 10 years, you would get a whopping Rs.74 lakhs. That is the power of compounding interest. The dream merchants project their investment plan with the rider of a disclaimer. The people would do better, therefore, with the advice of an expert in the equity field. It is well known that the small investor has avoided the equity market and hence all concerned are trying to woo him back to the stock market.