A seemingly small change in annualised returns can create a substantial difference in the final value of a mutual fund investment.
Here is an example with 2 investors who started with the same lump-sum amount and tenure, yet ended up with strikingly different outcomes.
In 2005, both Mr Raj and Mr Vinod began their mutual fund journey with an identical lump-sum investment of ₹ 10,00,000. They invested at the same time and for the same duration of 20 years. The only difference was the annualised return each achieved from their respective mutual funds.
Mr Raj’s mutual fund generated annualised returns of 10%, while Mr Vinod’s mutual fund achieved 12% annualised returns. This difference of just 2% per year, compounded over 2 decades, created a significant gap in their final corpus. You can calculate the same using this Lumpsum Calculator.
Read More: What is a Barbell Strategy and How Do You Use It?
Over the 20-year period, the difference in returns between the 2 mutual funds led to Mr Vinod’s corpus being ₹ 29,18,793 higher than Mr Raj’s. This outcome demonstrates how even a modest difference in annualised returns can grow into a substantial gap when compounded over the long term.
Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in securities are subject to market risks. Read all related documents carefully before investing.
Published on: Aug 8, 2025, 3:56 PM IST
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