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Power of Rs 5,55,555 One-time Investment in Mutual Fund: In how much time can your lump sum investment generate over Rs 5,00,00,000 corpus?
- Written by ZeeBiz WebTeam
Published: Zee Business| Updated: Zee Business
Power of Rs 5,55,555 One-time Investment in Mutual Funds: This year, Mother's Day in India is celebrated on May 10. People typically gift their mothers flowers, clothes, and handbags on this occasion, but if you're looking for something different and more practical that also secures your mother's future, you might consider investing in mutual funds in her name.
Mutual funds are an asset class that invests money in various assets like stocks, equities and bonds on behalf of investors. There are two types of investments in mutual funds: one-time investment/lump sum investment and monthly investment. There are many advantages of investing in mutual funds, such as compounding benefits, diversification, rupee cost averaging, liquidity and many more.
In this write-up, we will try to explain how your one-time investment in a mutual fund can grow significantly when you stay invested for the long term.
(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning.)
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One-time investment in a mutual fund
1/9Let's assume you are making a one-time investment of Rs 5,55,555 in mutual funds and aiming to create a corpus of over Rs 5 crore. Now, can you guess how much time it will take? Let's calculate and find -
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Lump Sum Investment in Mutual Funds: Assuming a 13% annualised return
2/9For all calculations, we are assuming a 13 per cent annualised return rate.
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Rs 5,55,555 One-time Investment in Mutual Fund: How many years will it take to build a corpus of over Rs 5 crore?
3/9To create a corpus of over Rs 5 crore with a Rs 5,55,555 one-time investment, one needs to invest for at least 37 years in mutual funds, according to the calculations.
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Rs 5,55,555 One-time Investment in Mutual Fund: Calculating average capital gains
4/9One can expect a total of Rs 5,05,68,992 (on average) as capital gains by making a one-time investment of Rs 5,55,555 in mutual funds for 37 years.
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Mutual Fund Returns on Lumpsum Investment: Actual amount may vary
5/9However, it should be noted that this is an expected return, and the actual amount may vary depending on the market conditions.
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Lump sum investment in mutual funds: How much would Rs 5.55 lakh one-time investment become in mutual funds in 37 years?
6/9Consequently, at the end of 37 years, you may get a total of Rs 5,11,24,547 (approx.). This includes the principal investment and capital gain.
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Power of One-time Investment in Mutual Fund: Full Calculation Summary
7/9Total Investment Amount: Rs 5,55,555 Capital Gains: Rs 5,05,68,992 Total Approx. Return: Rs 5,11,24,547
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What is rupee cost averaging?
8/9Rupee cost averaging is an investment strategy where a fixed sum is invested in mutual funds at regular intervals.
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What is compounding?
9/9It is a process in which you will earn capital gain not only on the principle amount but also on the capital gain earned earlier. Therefore, strategic investment in mutual funds can be beneficial if you are looking for investment ideas.
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