Mutual Fund SIP: Most of us believe that saving a small amount regularly is a financially prudent move. Depositing ₹10,000 into our bank account every month makes us feel secure. We think it’s preparation for the future, but is it truly leading us to wealth or just providing the illusion of security?
The story of 30-year-old Rohan reveals this truth. He saved ₹10,000 every month for five years and accumulated a total of ₹6 lakh. But by the time he bought his dream car, the price had reached ₹10 lakh. His hard-earned savings lagged behind the pace of inflation. This is the same situation every average saver finds themselves in—money appears to grow, but its actual purchasing power diminishes.
Saving alone won’t make you rich.
Money in the bank remains stable, while commodity prices rise every year. Low interest rates and rising inflation combine to weaken your savings. This is why simply accumulating money isn’t a step towards wealth creation, but rather a narrow horizon of stability.
Suppose you save ₹10,000 every month. After ten years, it becomes ₹1.2 million. But if inflation is assumed to be 6% annually, the actual value of this ₹1.2 million will be only ₹6.7 million. This means that despite the money growing, its value is halved. This is why saving alone is a limited strategy. If you invest this same ₹10,000 every month in a mutual fund that generates an average annual return of 12%, the same amount will become over ₹2.2 million in ten years. Thus, while saving provides security, investing offers the opportunity for growth.
Where money makes money
Compound interest is the magic that turns small investments into large capital over time. When you earn interest on an investment, that interest generates further interest. This process multiplies your wealth over time. If you invest ₹10,000 every month for 20 years in an investment with a 12% annual return, it becomes approximately ₹1 crore. But if the same investment is continued for 30 years, it becomes ₹3.5 crore. The only difference is the timing, not the amount.
Time is the greatest investment.
Those who start investing early will come out ahead. For example, if you start investing ₹10,000 per month at the age of 25 and earn a 12% return, by the age of 55, that amount will become ₹3.5 crore. But if you start 10 years late, at age 35, you’re left with only ₹1 crore. This loss of ₹2.5 crore is simply the price of “delay.”
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Be Disciplined in Investing
Wealthy people don’t race to get rich quickly. They know that real wealth is built with time, discipline, and the power of compounding. They put their money to work in the form of stocks, bonds, real estate, or businesses. They understand that if money remains idle, its value will depreciate, but if it’s allowed to grow, it will turn into wealth.
Now or Never
Many people put off investing, thinking, “I’ll start when I earn more.” This is the biggest mistake. No one can predict the right time to invest, but the best time is always “today.” The longer you delay, the less you’ll gain. So, don’t let your money “sleep” in the bank; put it to work and take the first step towards financial independence today.