How Much Can I Earn in 10 Years If I Invest ₹10,000 Per Month in Mutual Funds?

Investing in mutual funds is a popular way to grow your wealth over time. If you're considering investing ₹10,000 per month, you might be wondering how much you can earn in 10 years. In this blog, we'll explore the potential returns from such an investment, taking into account different scenarios and factors that can influence your earnings. Let's dive in!

Understanding Compounding

Before we calculate the potential earnings, it's important to understand the concept of compounding. Compounding is the process by which the value of an investment increases exponentially over time due to the interest earned on both the initial principal and the accumulated interest. This makes compounding a powerful tool for long-term wealth creation.

Factors Influencing Your Earnings

1. Rate of Return:

   • The rate of return is the annual percentage increase in the value of your investment. Historical data shows that mutual funds can offer varying rates of return based on market conditions and the type of fund.

2. Investment Duration:

   • The longer you stay invested, the more you benefit from compounding. A 10-year investment horizon is a good starting point for significant growth.

3. Consistency:

   • Consistently investing a fixed amount each month (Systematic Investment Plan or SIP) helps average out the cost of your investments and reduces the impact of market volatility.

Calculating Potential Earnings

Let's calculate the potential earnings from investing ₹10,000 per month in mutual funds over 10 years, assuming different rates of return.

1. Assuming a 12% Annual Rate of Return:

   • Using the formula for the future value of a series of cash flows (SIP calculation):

     

     Where:

     • P = Monthly investment (₹10,000)

     • r = Monthly rate of return (12% annual return / 12)

     • n = Number of months (10 years * 12 months)

     
     

     

     
     

     Future Value ~ ₹23.23 lakhs

Key Takeaways

1. Power of Compounding:

   • The examples above illustrate the power of compounding. Even a small difference in the rate of return can significantly impact your future wealth.

2. Consistency Pays Off:

   • Consistently investing a fixed amount each month helps you build a substantial corpus over time. SIPs are an effective way to achieve this consistency.

3. Long-Term Investing:

   • The longer you stay invested, the more you benefit from compounding. A 10-year investment horizon is a good starting point, but extending it further can yield even better results.

A Thought to Ponder

Imagine the potential growth of your investments over the next 10 years. By starting early and staying consistent, you can harness the power of compounding to build significant wealth.

For instance, in the first 10 years, you make approximately ₹11 lakhs in gains. But if you continue the same SIP for the next five years, the result will blow your mind. Your total investment increases from ₹12 lakhs to ₹18 lakhs, but your gains increase from approximately ₹11 lakhs to almost ₹32 lakhs, just in the next 5 years. That's the power of compounding.

Conclusion

Investing ₹10,000 per month in mutual funds can yield substantial returns over a 10-year period, depending on the rate of return. By understanding the power of compounding and staying consistent with your investments, you can build a significant corpus and achieve your long-term financial goals. If you're thinking about investments, Miles Wealth is the platform for you. Give us a try and download our app!

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Disclaimer: This blog is for educational purposes only. The securities/investments mentioned here are not recommendations.

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