Rs 30 Lakh One-time Investment in Mutual Funds: How many years will it take to create Rs 15 crore corpus? See calculations
Rs 30,00,000 One-time Investment in Mutual Funds: There are many investment options available in the market, and one of them is mutual funds. One of the best things about mutual fund investments is that you have the option of investing a lump sum amount or a monthly SIP. In this write-up, we will calculate how much time it will take to create a Rs 13 crore corpus with a Rs 30,00,000 one-time investment in mutual funds -
Rs 30,00,000 One-time Investment in Mutual Funds: There are many investment options available in the market, and one of them is mutual funds. Since equity funds have most of their investments in the share market, there is market risk involved in it. However, those who can take the risk find this option quite beneficial in terms of generating substantial wealth over the long term. One of the best things about mutual fund investments is that you have the option of investing a lump sum amount or monthly. If you, too, want to accumulate wealth for your post-retirement life through mutual funds but are a bit confused? Then, here we take an example and try to explain how mutual funds help in accumulating a significant corpus with a lump sum investment.
(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning.)
What is a Mutual Fund?
A mutual fund is an asset class that parks funds in various assets like stocks, equity, and bonds on behalf of investors.
Benefits of Mutual Fund
Some of the key benefits of investing in mutual funds include: compounding, diversification, rupee cost averaging, and liquidity.
What is compound growth?
Compound growth is a process in which you get capital gains on capital gains.
How does compounding work?
The compounding creates a snowball effect that helps your investments grow exponentially over time.
Start early for better returns
Timing is important to get the maximum benefit from mutual funds. The longer the duration of the mutual fund, the higher the compounding benefit. Confused? Let's understand with an example -
Rs 30,00,000 One-time Investment in Mutual Funds: Understand the scenario
Let's suppose you are investing Rs 30,00,000 in mutual funds as a lump sum investment with the aim of creating a wealth of over Rs 13 crore in the long term.
Can you guess how much time it will take?
Now, can you guess how much time it will take to create a Rs 13 crore corpus with a Rs 30,00,000 one-time investment in mutual funds? Let's calculate and find -
Assuming a 13% annualised return
We are assuming a 13 per cent annualised return rate for all the calculations.
Rs 30,00,000 One-time Investment in Mutual Funds: How many years will it take to create a Rs 13 crore corpus?
As per the calculations, you need to invest for at least 31 years in mutual funds to create a corpus of over Rs 13 crore.
Rs 30,00,000 One-time Investment in Mutual Funds: Calculating average capital gain
In these 31 years, you can expect a total of Rs 12,96,02,894 (on average) as capital gains.
Rs 30,00,000 One-time Investment in Mutual Funds: Final Corpus Received
Consequently, at the end of 31 years, including the principal investment and capital gain, you will get a total of Rs 13,26,02,894.
Full Calculation Summary
Total Investment Amount: Rs 30,00,000
Capital Gains: Rs 12,96,02,894
Total Approx. Return: Rs 13,26,02,894
Actual amount may vary
It should be noted that this is an expected return, and the actual amount may vary depending on the market conditions. Let's understand with another example -
Annualised return rate 15%: How soon will you reach the target of Rs 13 crore with Rs 30,00,000 one-time investment?
If the annualised return rate will be 15 per cent, then as per the calculation, you only need to invest for 27 years in mutual funds to accumulate a corpus of Rs 13 crore with Rs 30,00,000 one-time investment.