To start mutual fund at 30 instead of 25 can cut your corpus by half - here's how

Mutual Fund: Investment in mutual funds via systematic investment plans (SIPs) is a proven way to build long -term wealth. However, what really matters starts early. Even a short delay – says five years – can significantly reduce your final corpus and affect your financial goals. This is due to the phenomenon of composition, where early investments eventually produce higher returns. Earnings from the first years are added to the principal, who then earns a higher return in subsequent years. Cost of delay: SIP at 25 versus 30 to understand the impact of delayed investment, consider the figures on the ‘cost of delay computer’. Suppose you start investing £ 5,000 in a mutual fund -Sip at the age of 25. If you have an annual return of 10%, your corpus would grow at the age of 50 to £ 51.34 lakh. If you are now delaying your sips by five years and starting at the age of 30, your total saving at the age of 50 will drop to £ 25.97 lakh, almost half of what you could have accumulated. Age when investment accumulated wealth (Rs) 25 years 51.34 lakh 30 years 25.97 lakh 32 years 19.23 lakh (calculations carried out at the cost of delay computer) The cost of delay in this case is £ 28,37 lakh. If you delay investment with another two years and start investing at the age of 32, your accumulated savings will shrink to £ 19.32 lakh, with a cost of delay to a huge £ 36.31 lakh. To summarize, if you want to make the most of your investments for mutual fund, you should start as soon as possible. A delay that looks small does not appear to be as small in the context of mutual funds. Note: This story is for information purposes only. Please talk to a SEBI registered investment adviser before making any investment-related decision. Visit here for all updates for personal finance