Rs 9 Lakh Lump Sum Investment: Will It Cross Rs 50 Lakh In 15 Years?

Lump sum investments, while seeming a risky bet, could be highly rewarding. You just need a well-planned strategy and suitable timing. Such investments typically involve a large amount and must be undertaken with a medium to long-term outlook.

These investments can be made in either mutual funds or gold, or traditional financial instruments such as fixed deposits. Here, an investor deploys the entire principal upfront rather than in smaller amounts at periodic intervals.

One of the key advantages of a lump sum investment is that you get returns on a large amount from the first day of investment. Lump sum investments may seem risky during market downturns, but they could lead to higher earnings over the long run. If done right, investors don’t need to worry about adding contributions or timing of the market, particularly in the case of mutual funds.

However, lump sum investments come with their own risk, including potential loss if the market declines shortly after investment in the case of mutual funds. While traditional instruments may offer guaranteed returns, the returns are not attractive compared to mutual funds.

But can Rs 9 lakh lump sum, if invested over 15 years, grow more than five times and if yes, which instruments might be able to help?

Let’s see through a comparison between mutual funds, FDs and gold.

Rs 9 Lakh Lump Sum In Gold:

• Target: Rs 50 lakh

• Investment amount: Rs 9,00,000

• Investment duration: 15 years

• Expected rate of return: 10%

• Estimated returns: Rs 28,59,523

• Total value: Rs 37,59,523

Rs 9 Lakh Lump Sum In Mutual Funds

• Target: Rs 50 lakh

• Investment amount: Rs 9,00,000

• Investment duration: 15 years

• Expected rate of return: 12%

• Estimated returns: Rs 40,26,209

• Total value: Rs 49,26,209

Rs 9 Lakh Lump Sum In FDs:

• Target: Rs 50 lakh

• Investment amount: Rs 9,00,000

• Investment duration: 15 years

• Expected rate of return: 7%

• Estimated returns: Rs 15,83,128

• Total value: Rs 24,83,128

Investors should note that these returns are only estimated values based on historical returns of the respective investment instruments. From above, it can be seen that the tool that is closest to the required target of Rs 50 lakh is mutual funds, offering significantly higher returns compared to other instruments.

However, mutual funds and gold have been known to outperform each other during different market cycles. When equities rise, mutual funds often deliver stronger returns, while gold typically gains during uncertain or volatile periods. Hence, investors are advised to make their decisions thoroughly, understanding market conditions and potential challenges. It is advisable to consult a certified financial planner.

Disclaimer: This article is only for informational purpose. NDTV Profit advises readers to consult with their own financial or investment adviser before taking any investment decision.