The magic of compound interest: Rs 100,000 in this mutual fund grows to Rs 700,000 in 10 years

Earn 21% in 1 year INRinvestment of 100,000 to grow into INR1.21 million. This comeback is impressive, but not awe-inspiring. However, if you keep that amount invested for a longer period of time, your investment will grow at a faster rate. The rationale behind this rapid growth is ‘compound interest’.

The power of compounding is so deep and powerful that it is also euphemistically referred to as “magic.” In fact, it’s not magic in the literal sense, but simple mathematics, which I’ll try to explain here.

Here, we will break down the “magic of compound interest” using the Japan India Growth Fund as an example. This is a medium-sized investment trust. First, let’s understand what a mid-cap fund is.

mid cap stock fund

These are mutual funds that invest at least 65 per cent of their assets in mid-cap stocks as per Sebi’s classification of mutual fund schemes. Mid-cap stocks are the securities of publicly traded companies that rank between 101 and 250 based on market capitalization.

(Source: mf.nipponindiaim.com; AMFI)

As you can see from the table above, INR100,000 grew INR1.53 million in one year, an increase of 53.58%. Over the past three years, investment has increased as follows: INRThe rate of return for this scheme is 32.37 per cent, hence 232,000,000.

In 5 years, Mid-Cap Mutual Funds grew by 25.72%, which led to; INRGrow to 100,000 INR3.14 million.Similarly, it would have grown as INRIf the same investment remained invested for 10 years, it would be worth $7.08 billion.

About the system

The scheme was launched on October 8, 1995 and the fund managers are Rupesh Patel and Sanjay Doshi. The minimum investment amount for this scheme is INR100 and Re multiples of 1.

Top constituent stocks include PFC, Cholamandalam, Persistent Systems, Fortis Healthcare, Varun Beverages, Supreme Industries, NTPC, Prestige Estate Projects, AU Small Finance Bank and Angel One. is included.