Rs 20 Lakh One-time Investment in Mutual Funds: How many years will it take to create Rs 7 crore corpus? Check calculations
Rs 20,00,000 One-time Investment in Mutual Funds: Everyone wants a safe and secure financial future for themselves or their family. This can happen in two ways – either you will have generational wealth, or you will invest the money in a good investment option. If you belong to the second category and want to earn money by investing, then mutual funds can be beneficial for you. In MF, you have the option of whether you want to invest a lump sum amount or invest monthly. Are you getting confused? Let us understand with an example what mutual funds are and how they help in accumulating substantial wealth in the long term –
(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 investment platform that pools money from many investors and invests this money in various assets like stocks, equity, and bonds on behalf of investors.
Benefits of Mutual Fund
- Compounding benefits
- Diversification
- Rupee cost averaging
- Liquidity
What is compound interest?
Compound interest is the interest you earn on interest.
How does compounding help to grow?
The compounding creates a snowball effect that helps your investments grow exponentially over time.
Time is the key
The longer the mutual fund duration, the greater the compounding benefits. Confused? Let's understand with an example -
What is the scenario?
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.
How much time will it take?
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 -
Assuming a 13% annualised return
We are assuming a 13 per cent annualised return rate for all the calculations.
Rs 20,00,000 One-time Investment in Mutual Funds: How many years will it take to create a Rs 7 crore corpus?
As per the calculations, you need to invest for at least 30 years in mutual funds to create a corpus of Rs 7 crore.
Rs 20,00,000 One-time Investment in Mutual Funds: Calculating average capital gain
In these 30 years, you can expect a total of Rs 7,62,31,796 (on average) as capital gains.
Note: 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.
Rs 20,00,000 One-time Investment in Mutual Funds: Final Corpus Received
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.
Full Calculation Summary
Total Investment Amount: Rs 20,00,000
Capital Gains: Rs 7,62,31,796
Total Approx. Return: Rs 7,82,31,796