Rs 5 Lakh Lump Sum for 35 Years vs Rs 50 Lakh Lum Sum for 14 Years: Which can create Rs 2,64,00,000 wealth faster for you?

Rs 5 Lakh Lump Sum for 35 Years vs Rs 50 Lakh Lum Sum for 14 Years: Creating a Rs 2.64 crore corpus from a Rs 5 lakh investment seems to be an insurmountable task. In contrast, generating the same corpus from a Rs 50 lakh investment appears to be an easy task. But what if you have the choice of investing Rs 5 lakh for a longer period than Rs 50 lakh for a shorter period? What if you are investing Rs 5 lakh for 35 years and Rs 50 lakh for 14 years? Which can be your faster way to create a Rs 2.64 crore corpus. See calculations to know

Power of compounding in lump sum investment

Because of the power of compounding, an investment grows faster with time. So, if an investor is investing Rs 1 lakh for 10 years at a 12 per cent annualised return. In 10 years, they can create an estimated corpus of just Rs 3,10,585, but in 40 years, the same investment can grow to Rs 93,05,097. Now apply the same logic to a Rs 5 lakh investment for 35 years and a Rs 50 lakh investment for 14 years at a 12 per cent annualised return.

Corpus from Rs 5 lakh investment in 35 years 

In 35 years, estimated capital gains will be Rs 2,58,99,810 and the estimated corpus will be Rs 2,63,99,810.

Corpus from Rs 50 lakh investment in 14 years

In 14 years, estimated capital gains from a Rs 50 lakh investment will be Rs 1,94,35,561 and the estimated corpus will be Rs 2,44,35,561.

Conclusion

A Rs 5 lakh investment is giving higher capital gains of over Rs 65 lakh because of 19 years of extra compounding.