Power of Rs 10,00,000 One-time Investment: How your Rs 10 lakh investment can turn into Rs 3 crore, Rs 4.47 crore, and Rs 6.63 crore in 30 years

Power of Rs 10,00,000 One-time Investment: A mutual fund lump sum investment of Rs 10,00,000 may secure your financial freedom some decades from now! Such an investment has the potential to grow to Rs 3 crore, Rs 4.47 crore and Rs 6.63 crore in 30 years because of the power of compounding and consistent market performance. For a disciplined investor who values time and performance, such modest beginnings may provide massive wealth in the long run.

Here are different return scenarios that can generate Rs 3 crore, Rs 4.47 crore or Rs 6.63 crore in the 30-year time frame. 

Power of compounding 

In the power of compounding, you get return on return. The growth of the previous year is credited to the growth of the current year, creating a corpus multiple times the investments.

When this phenomenon prolongs for years, it can create 50X, 75X or 100X returns. See an example– 

Suppose you have Rs 7,50,000 that you want to invest in a mutual fund scheme through a lump sum.

You expect a 12 per cent annualised return. This is how your investments will appear in 10, 20, 30 and 40 years.

In 10 years, estimated capital gains will be Rs 15,79,386, and the estimated corpus will be Rs 23,29,386.

In 20 years, estimated capital gains will be Rs 64,84,720, and the estimated corpus will be Rs 72,34,720.

In 30 years, estimated capital gains will be Rs 2,17,19,942, and the estimated corpus will be Rs 2,24,69,942.

In 40 years, estimated capital gains will be Rs 6,90,38,228, and the estimated corpus will be Rs 6,97,88,228.

In each decade, you can see that the growth is higher than before.

Consistent performance 

If you look at the performance of market-linked investments, it is not linear.

Some years, they may show extraordinary growth; in other years, growth may be modest, and in a few, it can be negative.

But if one has a long-term investment horizon, the investment may go through different phases to recover, and growth may appear to be consistent.

Calculations for story

We will calculate the required annualised returns to get Rs 3 crore, Rs 4.47 crore, and Rs 6.63 crore corpuses from a Rs 10,00,000 mutual fund lump sum investment in 30 years.

Growth rate required to create Rs 3 cr corpus from Rs 10 lakh investment in 30 years 

An investor needs 12 per cent annualised growth to create a Rs 3 crore corpus from a Rs 10 lakh one-time investment.

In 30 years, estimated capital gains will be Rs 2,89,59,922, and the estimated corpus will be Rs 2,99,59,922.

Growth rate required to create Rs 4.47 cr corpus from Rs 10 lakh investment in 30 years

An investor needs 13.50 per cent annualised growth to create a Rs 4.47 crore corpus from a Rs 10 lakh lump sum investment.

In 30 years, estimated capital gains will be Rs 4,36,55,591, and the estimated corpus will be Rs 4,46,55,591.

Growth rate required to create Rs 6.63 cr corpus from Rs 10 lakh investment in 30 years

One needs a 15 per cent annualised return to create a Rs 4.18 crore corpus from a Rs 10 lakh lump sum investment.

In 30 years, estimated capital gains will be Rs 6,52,11,772, and the estimated corpus will be Rs 6,62,11,772.