'High-Return Assets': Can A Rs 4.4 Lakh Lump Sum Investment Turn Into Rs 20 Lakh Corpus?
Since the money, in most cases, could be locked for a significant time, the wrong asset category could diminish the return value of such an investment.
Lump sum investments can be a valuable addition to regular savings, offering the convenience of investing a large amount at once and letting it grow over time. Many investors prefer this approach because a lump sum investment allows them to earn returns on a large amount from the first day itself. However, lump sum investments also come with their own advantages and challenges.
Investors often prefer investing a lump sum amount when they receive a surplus, such as a bonus or wedding gift. However, picking the right asset based on the investment horizon is a critical factor for such investments. Since the money, in most cases, could be locked for a significant time, the wrong asset category could diminish the returns.
For lump sum amounts, investors may choose from a variety of assets such as equity-oriented mutual funds, gold or traditional instruments like fixed deposits (FDs). Understanding the potential of these assets is key to maximising the gains. This helps set realistic expectations for long-term financial goals.
For instance, can a lump sum amount of Rs 4.4 lakh turn into Rs 20 lakh? A combination of some high-return assets, like mutual funds and gold, could be helpful in reaching this ambitious target with a lump sum investment of only Rs 4.4 lakh.
Let’s see how an investment of Rs 4.4 lakh could help you build a corpus of Rs 20 lakh.
Rs 4.4 lakh Lump Sum In Mutual Funds To Build Rs 20 Lakh
Investment amount: Rs 4,40,000
Target: 20 years
Investment duration: 14 years
Expected rate of return: 12% (historical trend)
Estimated returns: Rs 17,10,329
Total value: Rs 21,50,329
From the above calculation, it can be seen that a lump sum investment of Rs 4.4 lakh can turn into Rs 20 lakh in around 14 years, at an assumed annual return of 12%. Investors should note that equity-linked mutual funds are volatile in nature, which means the average annual returns may vary due to market volatility.
Investing Rs 4.4 Lakh Lump Sum In Gold For A Rs 20-Lakh Corpus
Investment amount: Rs 4,40,000
Investment duration: 16 years
Expected rate of return: 10%
Invested amount: Rs 4,40,000
Estimated returns: Rs 15,81,788
Total value: Rs 20,21,788
Historically, gold has rewarded investors by delivering an annual average return of 10%. However, in some economic cycles, the precious metal has outperformed equities. A lump sum investment in gold could help you reach Rs 20 lakh faster than expected, but the outcome depends on factors like economic conditions, gold price in global markets and demand-supply dynamics.
Rs 4.4 Lakh Lump Sum In FDs For Accumulating Rs 20 Lakh:
Investment amount: Rs 4,40,000
Investment duration: 22 years
Expected rate of return: 7%
Compounded: Quarterly
Estimated returns: Rs 15,85,263
Total value: Rs 20,25,263
As seen from the above calculation, mutual funds could help you reach the target of Rs 20 lakh faster compared to other instruments like gold and FDs with a lump sum investment of Rs 4.4 lakh. However, gold may also be able to surprise investors with higher-than-expected rewards, as seen recently.
This is why it’s always advisable to consult a financial planner before choosing instruments for a lump sum investment. This will align your strategy with goals, risk tolerance and market conditions, ensuring higher returns.
