Power of Rs 5,00,000 Lump Sum Investment in Mutual Funds: In how many years, Rs 5 lakh one-time deposit can grow to 5 crore corpus

In an investment, two things are important; investment return and duration. Both can grow one's investments exponentially. See some examples to realise the power of both.

A 1 per cent annualised extra return may not appear to be very impactful, but this difference can change the equation of your corpus in the long run. 

Suppose you invest Rs 5 lakh in a mutual fund; look at the difference in corpus you can generate at annualised returns of 12 per cent and 13 per cent in 35 years.

At a 12 per cent return, estimated capital gains will be Rs 22,58,99,810, while the estimated corpus will be Rs 2,63,99,810.

At a 13 per cent return, estimated capital gains will be Rs 33,55,34,253, while the estimated corpus will be Rs 3,60,34,253.

The gap is nearly Rs 1 crore. 

Now, take the example of a Rs 3 lakh investment. At a 12 per cent annualised return, let's see how the corpus can grow in 30, 35, and 40 years. In 30 years, estimated capital gains will be Rs 86,87,977, and the estimated corpus will be Rs 89,87,977. In 35 years, estimated capital gains will be Rs 1,55,39,886, and the estimated corpus will be Rs 1,58,39,886.

In 40 years, estimated capital gains will be Rs 2,76,15,291, and the estimated corpus will be Rs 2,79,15,291. Just look at the gap in the last 10 years of the investment. The corpus has jumped by more than 3 times.

Now look at how a Rs 6 lakh one-time investment can generate a large corpus compared tto onecreated from a Rs 30 lakh deposit at a 12 per cent annualised rate. If we invest Rs 6 lakh for 32 years, estimated capital gains will be Rs 2,19,49,036, while the estimated corpus will be Rs 2,25,49,036.

If we invest Rs 30 lakh for 17 years, estimated capital gains will be Rs 1,75,98,123, while the estimated corpus will be Rs 2,05,98,123. Here, look at the capital gains that both investments have generated. IIt's because the Rs 6 lakh investment is getting 15 extra years for compounding.

We will calculate in how many years your Rs 5,00,000 lump sum investment will grow to a Rs 5 crore corpus at 12 per cent, 13 per cent, 14 per cent, and 15 per cent annualised returns.

It will take approximately 41 years to reach this corpus. In 41 years, estimated capital gains will be Rs 5,16,08,543.45, and the estimated corpus will be Rs 5,21,08,543.45. 

It will take approximately 38 years to reach this corpus. In 38 years, estimated capital gains will be Rs 5,14,93,716, and the estimated corpus will be Rs 5,19,93,716.

 

It will take approximately 36 years to reach this corpus. In 36 years, estimated capital gains will be Rs 5,54,17,102, and the estimated corpus will be Rs 5,59,17,102.

It will take approximately 33 years to reach this corpus. In 33 years, estimated capital gains will be Rs 4,98,49,914, and the estimated corpus will be Rs 5,03,49,914.