Consistent Investment Habit, Creates Huge Wealth

Dear Friends,

I want to have a discussion about an important topic with all of you today using an actual scenario.

We've previously talked about the compounding effect. However, after using this illustration, you will see the potential benefits of investing long-term investments more clearly. 

Huge wealth may be generated with ease with little, regular investments.

Please make an effort to better understand the depth and concept of long-term investing.

You must choose a company with strong fundamentals and long-term business potential, and you must continue to invest in it through all highs and lows without taking a break. 

And you receive a huge reward for your consistency.

The price history and business growth in this example are real, but we are using it as a case study to better understand the concept; hence, I am not providing the stock name.

Please avoid from trying to compare Stock A to any other stock. We shall refer to it as Stock A.

We must first learn and then earn. 

In 2009 Stock A price was around Rs.92 and if we started our investment with monthly Rs.2000 in similar way as SIP.

If we continue to invest Rs.2000 every month until Sept. 2023, we would have invested around Rs.354,000 [Rs.3 Lac and 54 Thousand] to date. and roughly 846 Quantities might have been acquired at an average purchase price of 418 per share.

The current value of the investment is Rs.1294084 with a profit of Rs.940084 [if the investment amount is removed]. As on data the CMP for Stock A is Rs.1500. Dividend and stock splits are not included in this profit.

For better understanding and study, all the information is provided in the table below. 

See what actually happened now.

We began investing in 2009 with a Rs.92 stock price and made monthly SIP investments of Rs.2000. Again, we made an investment of Rs.354,000 here.

But due to effect of yearly dividend [Dividend Re-invested] and Stock split twice, in its span of 13 yrs. from 2009 to 2023, the amount accumulated is Rs.8793921 [Rs.87 Lac and 93 thousand] w.r.t Stock A CMP Rs.1500.

Taking our initial investment of Rs.354,000 out of the equation, the profit is Rs.8439921.

Please try to under the beauty of long-term consistent investment and effortless reward.

Disclaimer: This post is not considered a recommendation to buy, sell, or invest in any company; it is just intended for educational purposes. Do your own research and due diligence before making any investment decision, and talk to your financial advisor.