By continuously investing small amounts, you can accumulate huge wealth. For example, if an investment gives him a 12% return on a compound interest basis, that investment could double him in almost six years, or grow by 100%.
The key to building wealth step by step lies in what is commonly known as “the magic of compound interest”.
Mutual fund advisors suggest that investors can increase their wealth to meet their financial goals by investing small amounts on a regular basis. SIP (Systematic investment planning).
of concoction magicTherefore, investment handling becomes easier. Legendary investor Warren Buffett once called investing “a simple game.”
However, the proof of pudding is in how to eat it. To see how this works, look at the performance of well-performing schemes and assess how your investment swells over time.
for example, Sundaram Multicap Fund According to the (direct) earnings data given at , it has achieved a compounded return of 15.29% over the last ten years. AMFI, As of January 6, 2023.
Sundaram Multicap Fund
This fund was established in October 2022 (regular) and January 2013 (direct). Key constituents include RIL, SBI, ICICI Bank, HDFC Bank, Axis Bank, Infosys Bank, Hindustan Unilever and ICRA.
The fund scheme is managed by Sudhir Kedia and Ratish B Varier and has an average assets under management (AUM) of ¥1.917 billion.
With a compound interest of 15.29%, if someone invests a small amount of money, ¥12,000 monthly for 3 years, ¥5,50,756 by donation ¥4,32,000.
in 5 years, ¥12,000 is ¥10,85,007 for investment only ¥7,20,000.
| Year | Investment amount (Rs) | Cumulative amount (Rs) | Wealth Creation (Rs) | Increase (rupee) |
| 3 | 4,32,000 | 5,50,756 | 1,18,756 | 1,18,756 |
| Five | 720,000 | 10,85,007 | 3,65,007 | 2,46,251 |
| 7 | 10,08,000 | 18,08,965 | 8,00,965 | 4,35,958 |
| Ten | 14,40,000 | 34,04,287 | 19,64,287 | 11,63,322 |
(CAGR of 15.29% on Jan 6, 2023, according to AMFI data)
Similarly, in 7 years — a regular investment of ¥12,000 would have been inflated ¥In total we donated just 10,08,000 and won 18,08,965.
and the concoction magic work further.If the investor has consistently invested ¥12,000 in 10 years via EMI – the corpus is ¥34,04,287.Small amount of investment ¥14,40,000.
Also, asset growth accelerates towards the end of the decade.For example, in his first three years the total increase in wealth ended ¥1.18 million, the increase in wealth over the last three years is ¥116,000 rupees.
In summary, we can say that the magic of compound interest allows investors to build wealth over a period of time.
and with a small investment ¥If you invest $12,000 in a fund scheme that delivers a compounded rate of return of 15.29%, ¥Contribute 340,000 rupees ¥14.4 lakh only.
(Note: This article is for informational purposes only. Please consult a SEBI registered investment advisor before making any investment-related decisions. )
This diagram explains what a compound annual growth rate is.
First published: Jan 12, 2023, 12:16 PM IST
