The investment of £ 10,000 a month via SIP in this mutual fund would have swollen to £ 1.71 crore in 21 years. See how | Mint

Staying in a share or a mutual fund for a long period of time tends to deliver higher returns disproportionately, provided the choice of shares or fund is correct. This happens because of the phenomenon known as composition. It is so powerful that some experts refer it as ‘magic’. The rationale behind composition works like this: Return on investment in the first few years is added to the initial investment, which allows the principal to deliver even higher returns in later years. As a result, the initial investment grows significantly. To illustrate this point, we choose one Mutual Fund Scheme Tata Equity P/E Fund that produced 16 percent on the SIP. Here we explain how much the investment would have grown if someone regularly invests £ 10,000 a month via Systematic Investment Plan (SIP). If someone invested £ 10,000 a month for one year, the investment would have dropped to £ 1.14 Lakh by investing £ 1.20 Lakh. If someone invested the same amount for three years, the investment would have grown to £ 4.65 lakh by investing only £ 3.60 lakh and delivering a return of 17.47 percent during this period. The futures amount is invested (£ 12k per month) rate (%) 1 year 1,20,000 1,14,711 -8,15 3 years 3,60,000 4,65,579 17,47 5 years 6,00,000 9,66,059 19,15 Since the launch of 25,00,000 1.71,14,250 16 (Source: Tattamutualfund). Years, the consistent investment from £ 10,000 to £ 9.66 Lakh grew by investing a total of £ 6 Lakh, reflecting a 19.15 percent return. If someone has been invested consistently since the inception of the scheme in June 2004, it would have grown to £ 1.71 crore by investing a total of £ 25 Lakh, giving an annual return of 16 percent, Fund House’s official website reveals. It was assumed that the SIP was invested on the first day of each month. More on the scheme This growth-oriented value fund was launched on June 29, 2004. The most important constituent shares of the scheme are HDFC Bank, BPCL, Kotak Mahindra Bank, Icici Bank, Radico Khaitan, Coal India, Motilal Oswal, Muthoot Finance and Shriram Finance. This scheme is managed by two fund managers: Sonam Udasi and Amey Sathe. This scheme has invested this scheme in the financial services of sectors (38.24%), oil, gas and consumable fuel (10.83%), IT (7.77%), FMCG (7.02%) and car and car components (5.63%). Visit here for all updates for personal finance