Amazing story of three friends - Part 2

Three friends Mr. Cautious, Mr. Responsible, and Mr. Calculative aged around 50 meet up after a long time in the Alumni Club. After the usual chats on the good old days, the discussion turned towards investing habits. 


Mr. Cautious was proud of his investment habit, he said "I have been been saving since my age 30 and investing only in deposits and happy with 9% returns". 


Mr. Responsible said "I save and put largely in deposits and some money in equities" and my overall returns stood at 12%. 


Mr. Calculative said "I saved and always had a good balance in investing into deposits and equities and I managed a return of 15% ".

Now, let's for a moment assume, at their age of 35, three of them put Rs. 1 Lac each in an avenue which gave them about 9%, 12% and 15% returns per annum respectively. 

At 50 during the time of their get together, can you imagine what kind of money each one of them would have made?

Mr. Cautious put Rs 1 lac at his age 35 and at his 50, he accumulated @ 9%

Rs. 3,64,000

 
Mr. Responsible put Rs 1 lac at his age 35 and at his 50, he accumulated @ 12%

Rs.5,48,000

Mr. Calculative put Rs 1 lac at his age 35 and at his 50, he accumulated @15%

Rs.8,14,000

Result: Mr. Calculative made Rs 4,50,000 more than Mr. Cautious; And made Rs 2,66,000 more than Mr. Responsible. All this happened in the differential return of 6% and 3%.

Moral of the story:

Saving alone is not important; investing wisely is all the more important.

The power of compounding is at work always and very silently..... 

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