Rs 5,00,000 Lump Sum: What It Can Grow Into In 15 Years
Over 15 years, a lump sum amount of Rs 5 lakh, invested in mutual funds and gold, can grow into a sizable corpus.
Wealth accumulation requires discipline and long-term financial commitment. With the rapidly evolving financial services landscape in India, long-term financial planning has become convenient these days. Indian investors are showing interest in mutual fund systematic investment plans (SIPs) as well as gold for building a sizable corpus.
While monthly investments are certainly wealth builders and provide a stable roadmap for growth, lump sum investments are equally powerful. If an investor builds a habit of investing a lump sum amount occasionally, it can work as a surplus for their regular investments. This can come from bonuses or inheritance, or even gifts received on birthdays or weddings.
Investing a large amount early gives the advantage of more capital at work. The power of compounding accelerates with a higher initial investment. As a result, returns can grow significantly faster than smaller, periodic investments.
Over 15 years, a lump sum amount of Rs 5 lakh can grow into a sizable corpus. Let’s see how this lump sum investment in mutual funds and gold can grow over the years at an assumed annual interest rate of 10-12%.
Rs 5 Lakh Lump Sum In Equity Mutual Funds
Investment amount: Rs 5,00,000
Investment duration: Rs 15 years
Expected rate of return: 12%
Estimated returns: Rs 22,36,782
Total value: Rs 27,36,782
Rs 5 lakh lump sum in gold
Investment amount: Rs 5,00,000
Investment duration: 15 years
Expected rate of return: 10%
Invested amount: Rs 5,00,000
Estimated returns: Rs 15,88,624
Total value: Rs 20,88,624
Alternatively, investors can also opt for traditional assets such as fixed deposits, bonds and Public Provident Fund (PPF), which offer guaranteed returns. While these come with assured benefits, the returns may not be as attractive compared to equity mutual funds.
In any case, investing lump sum amounts occasionally can be a great way to encourage savings and supplement your investment fund. For best results, investors are advised to consult financial experts, who can guide them in selecting the right assets, timing investments effectively and aligning them with their long-term financial goals.
