Long-term Investment Planning: How many times do we use the annual office bonus for an investment purpose? Most often, we use it on our lifestyle or purchasing consumables. We never think that the same bonus invested for a few years can be of great importance in helping us build a retirement corpus, or a fund that can help us achieve some of our important financial goals. But for that, we need to be patient and use the long-term duration of our investment effectively. By doing so, one may create a Rs 1 crore corpus by investing a Rs 75,000 monthly office bonus for just 5 years. Know how it may be possible-
Office bonus for investment purpose
Your office bonus may be part of the variables, or it may be in addition to your cost to the company.
It may or may not depend on your performance.
But if you know that you will get at least a minimum amount every year, the same can be used for investment, at least for a few years.
How to use office bonus for investment
One may use this amount to make a lump sum (one-time) investment or may use it to make a yearly systematic investment plan (SIP) in a mutual fund scheme.
While you can make a one-time investment whenever you want, an annual SIP is paid on a fixed date.
Why long-term investment is necessary
Since we are expecting a large corpus from a small investment amount, we need to give it time, specially if we are investing it in a market-linked investment programme.
The compound growth of an investment shows its impact more evidentially in the long term.
How can we create corpus from office bonus?
If you start a yearly SIP in a mutual fund where the annualised return is 12 per cent, you will invest Rs 3,75,000 in 5 years, estimated capital gains will be Rs 1,58,639.18 and the estimated corpus will be Rs 5,33,639.18.
How to create Rs 1 crore fund
From here onwards, you don’t need to make any fresh investment but let the corpus grow at a 12 per cent annualised return for 26 years.
In 26 years, the estimated corpus of Rs 5,33,639.18 will grow to an estimated fund of Rs 1,01,60,525, where your estimated capital gains will be Rs 96,26,886.
How is it possible?
It is possible because after 5 years, your corpus is treated as a lump sum amount, where, because of compound growth, you keep getting a return on return even without making any new investment.
Here comes another question. What if one keeps investing Rs75,000 for 31 years?
In 31 years, total investment will be Rs 23,25,000, estimated capital gains will be Rs 2,04,63,578.94, and the estimated corpus will be Rs 2,27,88,578.94.
(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
