Can large-cap equity MFs help you double your money in just 5 years?

While everyone is looking to double their investments in the shortest span of time, it is important to note that shorter the time greater the risk. Many times we come across a brochure which claims to double our money in X amount of time. In the past. there were some chit funds which used to claim such things but we know how they have been. So can large-cap equity mutual funds double your money and that too just in 5 years? Let’s check out.

To have a better idea let us assume that you wish to invest Rs. 1 lakh in large-cap equity mutual funds. The average 5-year CAGR (Compounded Annual Growth Rate) provided by the large-cap equity mutual fund is 13.73 per cent. So after 5 years, 5 months you would end up having Rs. 2 Lakh.

This can also be understood by using the Rule of 72. Using Rule of 72, you can roughly understand how much time it would take to double your investments. In Rule of 72, you only need to divide 72 by CAGR. So let's continue with our example, where we need to divide 72 by 13.73. So as per Rule of 72, it would roughly take 5.24 years to double your money with CAGR of 13.73 per cent.

But it is always a good idea to not just look at your investment in isolation, rather you should link your financial goals to your investments and invest taking into consideration your risk profile.