Mutual Fund calculator shows that the power of compounding in mutual fund investment starts showing its effect slowly but with the passage of time it gains super speed, multiplying your wealth in surprising quick times. While there are certain risks and hundreds of mutual fund investment options, you can reach all financial goals fast if you manage to identify a winner fund. This is possible with the help of own research and professional advice.
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Now suppose you have already identified a good fund which may give 12% annual returns and you want to accumulate crores of rupees for retirement. How much time will it take to reach this retirement goal?
While in general investments like bank term deposits it may take ages or very large initial investment to reach the Rs 1 crore-mark, mutual funds can help you get up to Rs 5 crores in less than 25 years, provided you are ready to invest Rs 30,000 per month as SIP and annual return from the fund is 12%. Interestingly, the journey from Rs 1 to Rs 5 crore will take just around 12 years. You can make the calculation by yourself by using a compound interest calculation.
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At 12% annual interest and Rs 30,000/month SIP, it will take you around 12 years to reach the first crore. The journey from Rs 1 to Rs 2 crore will take another 5 years, and thereafter your mutual fund income will be turbocharged with the power of compounding. It will take you just around 3 years to reach the 3rd crore while the journey from Rs 3 crore to Rs 4 crore will be over in just 2 years and 3 months. A bigger surprise will come thereafter as you will reach the Rs 5 crore mark in less than 2 years.
Should you invest in mutual fund?
Mutual funds are considered safer as compared to stocks as they allow you to diversify investment in multiple companies or shares through single funds.
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“With proper understanding, mutual funds are the safest investment strategy at any time. Even amidst high inflation and bear market, it is safe to invest in mutual funds as the investments are for the long term and short-term fluctuation shouldn’t be a worry for investors,” says Rachit Chawla, CEO Finway FSC.
“While inflation can have a negative impact on those who have money sitting in the bank account, it won’t affect people who have made smart investment for the longer run. Though high inflation can result in higher market volatility in the short-term, it is certain to open up new opportunities in the long-term; this is where mutual fund investments become profitable,” he adds.
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“Mutual funds as an investment option for wealth creation can be with compounding, rupee cost averaging, easy liquidity, professional management, diversification, variety, convenience as well as strict government regulations and full disclosure are managed by experts and require a relatively low amount to start an investment,” says Palka Arora Chopra, Senior Vice President at Mastertrust.
“In the current scenario when the central banks are squeezing their balance sheets and raising rates due to rising inflation and higher commodity prices, Investors should keep their Systematic Investment Plans (SIPs) going and if the market continues to drop, with valuations falling below historical averages, they should gradually increase their equity allocation in a controlled manner,” she adds.
Chopra suggests that an investor who is underinvested in equity should take advantage of the current market correction and begin rebalancing their portfolios to include more equities.
