Rs 2 Lakh Lump Sum Investment: What It Can Grow Into In 10, 15 And 20 Years

While regular investment habits are rewarding, it can always be beneficial to supplement this habit with occasional lump sum investments. 

Even smaller amounts invested two or three times a year can significantly enhance the growth of your portfolio, acting as an extra boost for your wealth creation journey. A lump sum investment could be helpful for higher returns as the power of compounding generates earnings on the entire principal from day one. This allows the money to grow exponentially over time, benefitting from market gains. 

If you get your hands on a bonus or more disposable income due to tax benefits, putting them in a lump sum investment could be a great financial hack. Assuming an investor wants to invest Rs 2 lakh lump sum over a long-term horizon, it has the potential to significantly grow over time, even reaching up to 10 times over 20 years.

One of the most popular ways to invest a lump sum amount is to put them in equity-oriented mutual funds. With a long-term outlook, mutual funds provide the ability to spread risks while benefiting from professional management and the power of compounding.

Let’s see the potential growth of a lump sum investment of Rs 2 lakh across tenures of 10, 15 and 20 years.  

As per historical trends, equity mutual funds offer average returns of 12-14% per annum over a long-term horizon. However, for a tenure of 10 years, the returns typically could be around 10% per annum.

Rs 2 Lakh Lump Sum Investment Over 10 Years:

Let’s see how an investment of Rs 2 lakh could grow in 10 years at an assumed rate of 10% per annum:

·      Investment amount: Rs 2,00,000

·      Investment duration: 10 years

·      Expected rate of return: 10%

·      Estimated returns: Rs 3,18,748

·      Total value: 5,18,748

As seen from the above calculation, your lump sum investment of Rs 2 lakh can rise more than 2.5 times, even at a modest return of 10% per annum.

The same lump sum investment can offer potentially higher returns over an extended horizon of 15 to 20 years. Here’s how your investment could grow over long-term tenures of 15 years and 20 years.

Rs 2 lakh invested over 15 years:

• Investment amount: Rs 2,00,000

• Investment duration: 15 years

• Expected rate of return: 12%

• Invested amount: Rs 2,00,000

• Estimated returns: Rs 8,94,713

• Total value: Rs 10,94,713

Rs 2 lakh invested over 20 years:

• Investment amount: Rs 2,00,000

• Investment duration: 20 years

• Expected rate of return: 12%

• Invested amount: Rs 2,00,000

• Estimated returns: Rs 17,29,258

• Total value: Rs 19,29,258

Even a modest lump sum amount of Rs 2 lakh can grow up to 10 times over an extended horizon of 15 to 20 years. At an assumed return of 12% per annum, your investment can grow more than 5x in 15 years and nearly 10x in 20 years. So, the key to building wealth is to remain invested for a long tenure.   

As seen from above calculation, lump sum investments have the potential to grow multi fold when invested in the right assets. However, it is recommended to assess your risk tolerance, financial goals and market outlook before investing. For the best outcome, consult your goals with a certified expert to enhance the effectiveness of your investment strategy and avoid any financial stress.