One must inculcate the habit of investing however small may be the proportion. If you invest in a mutual fund which gives you average returns of 12 per cent a year, you can accumulate Rs 15 lakh to purchase a car with a small investment of Rs 100 a day. Know the calculation.
SIP: Rs 100 is a small amount these days. Even if you order small things to eat or drink, you easily spend your Rs 100. When it comes to your daily expenses, Rs 100 is a meagre amount as you need much more money in a day to run your expenses. But no amount is small when it comes to investing. An investment of as small as Rs 100 a day can do wonders for you. It can help you accumulate enough money to buy a Rs 15 lakh car in a few years.
Read More: Investment Planning For Girl Child: Where to invest for your girl child’s future?
How will you get Rs 15 lakh as returns to buy your dream car?
There are several ways where you can invest your money to get returns, but here, we assume that you invest in a mutual fund through a systematic investment plan (SIP) that gives you 12 per cent return every year.
Though mutual funds are market-linked and there is no guarantee that you will get 12 per cent return every year, we are assuming a 12 per cent return based on historical data of mutual funds.
If you invest Rs 3,000 every month in mutual funds through SIP, your investment will be Rs 5,40,000 in 15 years, but even at 12 per cent, you will get almost double the return on it.
At 12 per cent interest, you will get Rs 9,73,728 as interest in 15 years.
In this way, including your invested money and interest amount, you will get a total of Rs 15,13,728.
With this amount, you can easily buy a good car.
Apart from this, if you continue it for 5 more years i.e. keep investing Rs 3,000 in SIP for 20 years, you will get Rs 29,97,444.
Read More: ‘Young investors should be disciplined in investment pattern’: DP Singh of SBI Funds Management
How can you buy a Rs 15 lakh car in 10 years?
If you are in your early 20s and you have just started doing a job, you may think that buying a car in your mid-30s will be too late for you.
You want to set the target of buying a Rs 15 lakh car in 10 years, then you should invest Rs 6,500 a month, or a little over Rs 200 a day to accumulate that wealth. With Rs 6,500 investment/month, you will invest Rs. 775,200, in 10 years.
At a 12 per cent interest return, your wealth gain will be Rs. 725,710, and the total expected amount will be Rs. 1,500,910.
Read More: Education Loan In India: From PNB to State Bank of India; Check Interest Rates, Eligibility Here
How can you buy a Rs 15 lakh car in 5 years?
If you think that a Rs 15 lakh car that you purchase 10 years from now may not have you favourite features, and you want to advance your decision of buying a car to five years, here’s how you can achieve that.
To accumulate Rs 15 lakh in just five years, you need investment of Rs 18,185 a month.
In this way, you will invest Rs 1,091,100 in five years, at a 12 per cent return, your wealth gain will be Rs 408,915 and your will get Rs 1,500,015 as return on your investment.
Thus we see the shorter the time, the shorter the wealth gain.
It happens because you also get compound interest on mutual funds, which help you accumulate more wealth with lower investments in the long run.
We should not refrain from investing however small our investment may be.
Even a little investment of Rs 100 a day can help you accumulate sufficient wealth to purchase a car as expensive as Rs 15 lakh.
