Rs 20 Lakh One-time Investment in Mutual Funds: How many years will it take to create Rs 7 crore corpus? Check calculations

A mutual fund is an investment platform that pools money from many investors and invests this money in various assets like stocks, equity, and bonds on behalf of investors.

- Compounding benefits - Diversification - Rupee cost averaging  - Liquidity

Compound interest is the interest you earn on interest. 

The compounding creates a snowball effect that helps your investments grow exponentially over time.

The longer the mutual fund duration, the greater the compounding benefits. Confused? Let's understand with an example -

Let's suppose you are investing Rs 20,00,000 in mutual funds as a lump sum investment with the aim of creating a wealth of over Rs 7 crore in the long term. 

Now, can you guess how much time it will take to create a Rs 7 crore corpus with a Rs 20,00,000 one-time investment in mutual funds? Let's calculate and find -

We are assuming a 13 per cent annualised return rate for all the calculations. 

As per the calculations, you need to invest for at least 30 years in mutual funds to create a corpus of Rs 7 crore.

In these 30 years, you can expect a total of Rs 7,62,31,796 (on average) as capital gains. 

It should be noted that this is an expected return, and the actual amount may vary depending on the market conditions.

Consequently, at the end of 30 years, including the principal investment and capital gain, you will get a total of Rs 7,82,31,796.

Total Investment Amount: Rs 20,00,000 Capital Gains: Rs 7,62,31,796 Total Approx. Return: Rs 7,82,31,796