Only delay caused loss of Rs 83 lakh, that’s why it is said that time is money!

New Delhi. You too must have said and heard many times that time is money. You understand the meaning of this very well, but do you really make money from time? You can hardly believe this. If not, then look at this simple calculation and the whole picture will become clear. You will see yourself how a common man suffers a loss of Rs 83 lakh just because of the delay. Seeing such a huge amount, you must have been curious as to what is it that someone had to suffer a loss of lakhs of rupees just because of time.

Let us use the simplest investment option to prove that time is money. Nowadays, the most popular trend is to invest in mutual funds through SIP and lumpsum. To understand time is money, let us assume that you get an annual return of 12 percent. Now, if someone at the age of 20 makes a lump sum investment of Rs 1 lakh in a mutual fund, then by the retirement age of 60 years this amount will increase to around Rs 93 lakh. But, if someone invests Rs 1 lakh at the age of 40, he will get a return of only Rs 10 lakh till the retirement age of 60 years. The difference is clear that due to delay of just 20 years, there is a direct loss of Rs 83 lakh.

Why does money increase with time?
The answer to this is hidden in the formula of the great scientist Albert Einstein, which he called the eighth wonder of the world. Its name is compounding, you read it right. On the basis of this compounding, your small amount increases with time. In compounding, you also get interest next year on the interest received on last year’s investment. In this way, after a few years, there comes a time when the interest added to your returns is more than the amount you invested. This compounding gives you the feeling of time is money.

Direct relation between time and returns

• Investment made at the age of 20 will give 93 times return at the rate of 12 percent by the age of 60.
• If you invest at the age of 25, your money will grow only 53 times by the age of 60.
• If the same investment is made at the age of 30, then by the age of 60 the return will be 30 times.
• An investment made in 35 years will grow only 17 times by the time you turn 60.
• If someone has invested at the age of 40, then by the time he turns 60, his money will grow only 10 times.
• If the same investment is made in 45 years, then by the age of 60 the total return will be only 5.5 times.
• If you invest at the age of 50, your money will grow only 3.1 times by the time you turn 60.
• If you make the same investment in 55 years, you will get only 1.8 times return in the next 5 years i.e. till the age of 60.

a game of time, not money
One thing has become clear from the figures and calculations given above that it is more a matter of time than money to create a secure corpus for the future. Most people wait for more income to invest, whereas what should be done is that you should start investing with a small amount of whatever money you get. With this, you will start accumulating huge funds with time. If you get more money later, you can increase your investment. But, by waiting, you will not get money and time will also be wasted.