Returns from a Recurring Deposit

This just shows the graph assuming you invest 10K in any instrument per month. It could be a bank rd, mutual fund SIP, whatever. The point is show the effect of the T-I-M-E in your investment.

This plots the months you invest versus amount invested and the returns assuming a 8, 9 and 10% compounded annual returns. The investment is obviously linear, while the returns are exponential :), which is where T-I-M-E speaks.

In case you didn’t notice the significance of the graph, here is what it speaks in simple english: If you stay invested for just 5 years or 60 months, your investment is about 6L and u get anywhere from 7.2 to 7.6L, but hey if you are invested for 10 years (120 months), you have invested about 12L, but you get a handsome 18L to 19.9L (wow!), and if you are invested for about 30 years, you invested about 36L, but hold your breadth, you get anywhere from 1.4C to 2C.

To give a real-example, say Tom, Dick and Harry pass out of colleage at age 24 and start working from 25, and all retire at 60. Tom invests 10K every month since his first year of work. Thus Tom keeps investing 10K every month for 35 years. Dick starts a bit late at 30 years, thus invests for 30 years. Harry starts investing very late and starts only when he is 50, thus invests only 10K for 10 years. Here are returns of all 3, when they retire at 60, assuming they all got 8%, 9% and 10% yearly returns.

Invest early .. and good luck :)