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Warren Buffett Compounding Rate: The talk about an investment or compound returns can't be completed without mention of Warren Buffett, the Oracle of Omaha. The legendary US investor stepped down from the CEO post of Berkshire Hathaway last week. Buffett is continuing as chairman of the company, while Greg Abel took over as CEO. Buffett has the unique distinction of amassing 99 per cent of his wealth after turning 60 years old. He is 94 now with an estimated wealth of over $168 billion.

The power of compounding has played a key role in growing his wealth.

The estimated annualised rate of return through which his wealth has increased over the years is 22 per cent.

It means at that estimated rate, his wealth has grown exponentially in the last 34 years.

In this write-up, we present different scenarios which will show how your different investments can grow in 34 years at a 22 per cent annualised return.

Let's begin with a Rs 1,000 monthly SIP investment for 34 years where the annualised return is 22 per cent. 

In 34 years, the total investment will be Rs 4,08,000, estimated capital gains will be Rs 5,20,70,100, and the estimated corpus will be Rs 5,24,78,100.

If one invests Rs 5,24,78,100 in a mutual fund where they get an annualised return of 7 per cent, they can withdraw a monthly amount of over Rs 3,04,600 for 100 years through a systematic withdrawal plan (SWP).

At a 22 per cent annualised return, estimated capital gains will be Rs 8,62,44,413, and the estimated corpus will be Rs 8,63,44,413.

If one invests Rs 8,63,44,413 in a mutual fund where they get an annualised return of 7 per cent, they can withdraw a monthly amount of over Rs 5,01,000 for 100 years.

In 34 years, estimated capital gains will be Rs 47,48,64,474, and the estimated corpus will be Rs 47,82,64,474.

In 34 years, the total investment will be Rs 20,40,000, estimated capital gains will be Rs 26,03,50,501, and the estimated corpus will be Rs 26,23,90,501.

On a Rs 12 lakh investment, estimated capital gains will be Rs 1,03,49,32,960, and the estimated corpus will be Rs 1,03,61,32,960.

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)

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