We all talk about compounding, how small amounts grow big over time.
But here’s the truth most of us miss:
It’s not just time that matters; it’s also the size of our investment.
Let’s see how the same time period, same returns, but different investment amounts can create dramatically different outcomes.
Case 1: Rs 25,000 per month for 25 years
Assuming an average return of 12% p.a.
Total invested: Rs 75,00,000
Value after 25 years: Rs 4.21 crore
Wealth created through compounding: Rs 3.46 crore
Impressive. But what happens if we double the amount? Case 2: Rs 50,000 per month for 25 years
Same time, same return, only more commitment.
Total invested: Rs 1.5 crore
Value after 25 years: Rs 8.42 crore
Wealth created through compounding: Rs 6.92 crore
We invested 2x the money, but look at what that means in real terms;
a difference of Rs 3.46 crore in wealth over the same time span of 25 years Case 3: ₹50,000 per month for 30 years
Let’s stretch time by just 5 more years, no change in returns.
Total invested: Rs 1.8 crore
Value after 30 years: Rs14.42 crore
Wealth created: Rs 12.62 crore
That’s an additional Rs 5.7 crore in just 5 more years; no higher risk, no more efforts, just time and discipline.
What This Tells Us
1. Time is a multiplier, but money is the accelerator.
The more we invest, the faster compounding works for us.
2. The last few years create disproportionate wealth.
Between years 25 and 30, wealth jumped from Rs 8.42 crore to Rs 14.42 crore; that’s Rs 5.7 crore in just five years!
3. Scaling up investments as our income grows is the real secret.
Even a gradual increase in SIP can push us toward financial freedom much faster.
🔹 Quick Comparison Chart
Now, let’s see how these calculations work out if we change the rate of return from 12% to 7.1% (DSOPF, Bank Deposits, etc.)
This small difference in RoI from 12% to 7.1% can completely change our wealth outcome over the same period of 25-30 years. The chart below explains everything. Like, for example, an investment of Rs 50,000 per month in DSOPF for 30 years yields a maturity corpus of Rs 4.47 crores, whereas the same amount of investment in an equity mutual fund over the same time period of 30 years yields Rs 14.46 crores, a whopping difference of 10 crores
The Core Lessons
1. Return matters massively.
Over decades, even a few percentage points in returns make the difference between financial comfort and financial freedom. The difference between 7.1% and 12% isn’t just 4.9%; it’s crores of rupees and decades of peace of mind
2. Time amplifies everything.
In the early years, compounding feels slow and almost invisible.
But as the years pile up, it explodes, quietly turning disciplined investors into millionaires.
Every additional year we stay invested doesn’t just add returns, it multiplies them.
3. Asset choice defines our outcome.
Fixed-income assets (like DSOPF, PPF, bank deposits) may give stability, but growth assets like equity-oriented investments bring the power of higher compounding.
The Bottom Line
> Compounding doesn’t just reward patience; it rewards performance.
The investment rate of return can change our wealth outcome by crores,
even if we invest the same amount for the same time.
So yes, start early, but also invest wisely;
because in compounding, every percentage point counts.
To discuss anything related to your personal finance, kindly book a no-charge consultation with me at this link. (https://calendly.com/rakeshgoyal). Confidentiality is assured.
To remain updated on money matters, join our Telegram group “Lets Invest Wisely” at https://t.me/+SB3F7hQPbxNlMTc1