This might look a bit unbelievable at the moment but it is a credible fact that an investment of Rs 5000 per month for a period of 20 years or 240 months would yield as much as Rs 1 Crore. Upside, all this is a Tax-free income. So, you need not worry about 30% tax deduction. This is only because the income derived from mutual funds is completely tax-free. The returns can be accounted as 20% CAGR (compound annual growth rate) for a period of 20 years.
Where to Invest?
In the present scenario where banks interest rates are declining at rapid phase, it is advisable to invest in mutual funds under SIP (Systemic Investment Plan) where there are many funds that yielded as much as 20% CAGR return over a period of 20 years. There are negotiable risk factors involved when you go for a long-term investment like 20 years where the returns get averaged.
What are the Funds?
HDFC Equity Fund:
The fund was launched on January 1, 1995, and is one of the oldest and best-performing funds in India. If you had started a SIP (Systemic Investment Plan) of Rs. 5,000 in this fund on April 1, 1998, your investment as of April 1, 2017, would have grown to Rs. 1.95 crore which translates to a CAGR return of 23.56 per cent over a period of 20 years.
Franklin India Prima Fund:
It is one of the flagship funds of Franklin Templeton India. Since its beginning in December 1993, it has produced a CAGR return of 21.04 per cent as of April 1, 2017. If you had started a SIP of Rs. 5,000 in this fund on April 1, 1998, your investment as of April 1, 2017, would have grown to Rs. 2.38 crore which translates to a CAGR return of 25.11 percent over 20 years.
HDFC Top 200 Fund:
This is one of the flagship funds of HDFC Mutual Fund. It has generated a CAGR return of 20.88 per cent since its beginning in September 1996. If you had started a SIP of Rs. 5,000 in this fund on April 1, 1998, your investment as of April 1, 2017, would have grown to Rs. 1.43 crore.
Reliance Vision Fund:
The fund was launched on October 8, 1995. The has generated a CAGR return of 19.92 per cent as of now. Your Rs. 5,000 SIP in this fund starting from on April 1, 1998, would have grown to Rs. 1.46 crore by April 1, 2017.
Reliance Growth Fund:
This fund has produced a CAGR return of 23.68 percent since its beginning. Your Rs. 5,000 SIP in this fund starting from April 1, 1998, would have grown to a corpus of Rs. 2.12 crore by April 1, 2017, accounting a 17.66 times return.
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