Wed 27 Jun 2007
Investments: Risks vs higher returns
Posted by Prakash under General
A friend of mine, asked me if he was to invest in Mutual Funds vs keeping his money in the bank fixed deposit. To a prospective of how much difference a few percentage makes over a period of time, please see the following example.
Note: Standard disclaimer applies, I am no way an expert in investment and you may be better off having your money safely slashed away in the bank than taking any risks. So invest at your own risk.
Example:
A few assumptions:
Investment amount per year: 10,000
Tenure: 30 years
Total Amount invested: 300,000
At the end of 30 years the return on investment would depend on what rate of interest per annum the amount is invested.
Rate of Interest : Return on Investment
6 % : 838,016
8 % : 1,223,458
10 % : 1,800,434
12 % : 2,702,926
15 % : 4,999,569
20 % : 14,182,578
25 % : 40,339,678
Even a small 2% difference can result in 50% more return on investment! But a lot also depends on your risk appetite, so invest wisely. I used the Compound Interest Calculator to come up with these numbers.
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