Amid rising inflation, planning for the future well in advance is always considered a wise decision. These accumulated funds can help in achieving your financial needs to live a better post-retirement life. In mutual funds, there are two major ways to invest your hard-earned money - systematic investment plans (SIPs) or lump sum - with both of them having their own benefits and risks.
A one-time lump sum allows investors to generate higher returns due to high compounding, while SIPs are about a fixed amount at regular intervals that reduce the impact of market volatility.
Rs 13 Lakh Investment In Mutual Funds
Through one-time investment in mutual funds, people can significantly transform modest savings into substantial wealth. A key highlight behind this is the extraordinary power of compounding.
How it works? When you invest a lump sum, for example Rs 13 lakh, and allow the money to grow uninterrupted for a long duration of time, then the returns can be remarkably high. Mutual funds, especially the equity-oriented ones, have been carefully designed to harness the growth of the stock market and offer professional management.
As time passes, investors get to see how money starts generating returns not only on the original amount invested, but also on the accumulated profits. Due to the power of compounding, investors get to accelerate wealth creation, especially when paired with patience and discipline.
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So, how much time will a lump sum investment of Rs 13 lakh in mutual funds take to generate Rs 3 crore, Rs 6 crore and Rs 9 crore corpus? To understand this, let's assume that the mutual fund is getting a 12% annualised return rate.
1. Rs 3 crore
- Investment amount: Rs 13,00,000
- Investment duration: 28 years
- Expected rate of return: 12%
- Estimated returns: Rs 2,97,49,026
- Total value: Rs 3,10,49,026
This suggests that investors need to put Rs 13 lakh in mutual funds for at least 28 years to create a corpus of Rs 3 crore.
2. Rs 6 crore
- Investment amount: Rs 13,00,000
- Investment duration: 34 years
- Expected rate of return: 12%
- Estimated returns: Rs 5,99,85,272
- Total value: Rs 6,12,85,272
3. Rs 9 crore
- Investment amount: Rs 13,00,000
- Investment duration: 38 years
- Expected rate of return: 12%
- Estimated returns: Rs 9,51,33,563
- Total value: Rs 9,64,33,563
What To Know?
Investors must note that actual returns vary depending on market cycles. Often its seen that equity funds deliver 10% to 15% returns over long horizons, but volatility is inevitable.
Also, a corpus of Rs 9 crore might sound extremely large at present, but inflation reduces purchasing power. In such cases, investors are recommended to make long-term planning.
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