An investment of Rs 300 per day in this fund for 5 years would have given you 5 lakh

Have you ever envisioned putting a modest amount of money into a fund every day and ending up with Rs 5 lakh in five years? Doesn't it seem intriguing? Continue reading to learn more.

Discipline is always required for effective investment. “We don't have to be smarter than the rest. We must be more disciplined than the rest,” Warren Buffett correctly stated. As a result, success with mutual fund investments necessitates discipline.

A Systematic Investment Plan (SIP) is one method of exercising investing discipline. SIP is a method that allows you to invest in mutual funds (and also stocks) in small amounts on a regular basis. SIP allows you to invest in mutual funds on a daily, weekly, fortnightly, monthly, quarterly, and yearly basis.

When it comes to returns, equity funds appear to be the greatest option. They do, however, represent a higher risk than fixed income. However, this mutual fund has amassed Rs 5 lakhs in 5 years by investing Rs 300 every day. The fund in question is the ICICI Prudential Balanced Advantage Fund.

If you began investing Rs 300 per day in the ICICI Prudential Balanced Advantage Fund on August 10, 2017, you would have amassed Rs 5.05 lakh to date, which is about 1.4 times the original amount invested. This fund's daily SIP earned an XIRR of 12.36 per cent.

In fact, investing in the Nifty 50 in a similar manner produced nearly identical results. Furthermore, as compared to the Nifty 50, the ICICI Prudential Balanced Advantage Fund has a lower risk. The ICICI Prudential Balanced Advantage Fund primarily invests in stock and debt assets.

In terms of returns, it appears to outperform the category average across all trailing periods.

However, when it comes to risk measures, the fund performs inferior to the category average.

As previously said, investing is a game of discipline, and nothing beats investing via SIP. However, it is also critical to examine your risk profile and match it to the risk profile of the fund.

2 comments on article "An investment of Rs 300 per day in this fund for 5 years would have given you 5 lakh"

raj kutty

If I put 300 rupees per day for 5 years in a piggy bank in my cupboard, I would get 547500.

Simple arithmetic!

8/12/2022 11:38 AM

Henil Shah

Dear Raj Kutty, that’s true but only to some extent! Suppose you are saving Rs 300 for 5 years (saving for 365 days) and not ‘investing’ it, the total accumulated amount would be Rs 5,47,500.

But since the total trading days in 1 year are 252 (including weekends, public holidays, etc), the principal amount – Rs 300 at the end of 5 years, would be Rs 3,78,000. But since we took the NAV of the fund (mentioned in the article) and the trading days were also less, it came out to be Rs 3,70,200! What we are trying to say is that this fund accumulated Rs 5,05,426 in 5 years with a compounded annual growth rate (CAGR) of 12.63 per cent but if you had saved the same amount in your piggy bank, you wouldn't have gained any interest on that!

Coming back to your calculation, this fund can give you that much amount (approx. Rs 5,47,500) with just Rs 220 (assuming 365 trading days) instead of Rs 300 with a CAGR of 12.63 per cent! Hope you understood the concept!

8/12/2022 2:11 PM

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