Rahul started investing money at the age of 21. He started with investing Rs.2000 monthly in SIPs and got 15% compounded interest yearly.
A Systematic Investment Plan (SIP) is an investment tool which allows the investor to invest a fixed amount at regular intervals in a Mutual Fund scheme.
SIP works by investing a fixed amount at a defined frequency. With this an investor does not need to time the market and can invest in a hassle-free manner.
Total investment in a year = 2000*12 = Rs.48,000 Money at the end of 1 year = (15/100)* 48,000+ 48,000 = Rs.55,200
Assuming he never touched his investment, after 10 years: Total amount invested in 10 years= Rs.2,40,000 Number of years invested= 10 Money at the end of 10 years= Rs. 5,57,315 Total Earnings= Rs. 3,17,315
Since Rahul never disturbed his investments his money kept on growing at a rapid pace. In further 30 years, he would be owning Rs.6,28,07,511 i.e. total earnings= Rs.6,18,47,511 in total of 40 years with the investment of Rs.9,60,000