scorecardresearchAn SIP of ₹11,000 would have grown to ₹65 lakhs in this value fund. Here's

An SIP of 11,000 would have grown to 65 lakhs in this value fund. Here's how

Updated: 12 Oct 2022, 08:27 AM IST

By investing an SIP of 11,000 in ABSL Pure Value Fund over a period of 14 years & six months would have grown to 65 lakh. Read further for more details

Aditya Birla Sun Life Pure Value Fund has given a regular return of 14.57 percent and 16.11 percent direct return

Aditya Birla Sun Life Pure Value Fund has given a regular return of 14.57 percent and 16.11 percent direct return

When you make a small investment at a regular pace for a long period of time, the investment can, and does, grow to a considerably large amount. As the time rolls on, the fund increases at a pace faster than during the earlier part. This happens because of the magic of compounding.

Investment advisers often say that investors should invest small sums on a regular basis to accumulate a large amount to meet their financial goals via SIPs (systematic investment plans).

In other words, the magic of compounding makes handling of investment a simple affair. The Oracle of Omaha Warren Buffett also said that investing is a ‘simple game’ that financial advisors have turned ‘harder’ than it actually is.

Tenor (years)                     Return (%) Accumulated sum (Rs) Increase (Rs) 
514.579,74,6499.74 lakh
10                                                                     14.5729,85,25220.11 lakh
14.5                                                               14.5765,70,62735.85 lakh

(Based on an SIP of 11,000 per month)

As we can see in the table above, investing a regular sum of 11,000 in a mutual fund that is giving the return of 14.57 percent would accumulate 9,74,649 after five years.

The same investment when continued for another five years would increase to 29,85,252, showing an increase of 20.11 lakh.

In another 4.5 years, the investment rises to 65,70,627, thus showing an increase of 35.85 lakh.

ALSO READ: Understanding the power of compounding & factors that affect it

In other words, by investing the same amount of money, the increase in investment grows at a faster pace as the time rolls on.

In the last four-and-a-half years, the increase was faster than that witnessed in the first five or the next five years. This is the result of compounding.

Particulars            Details
SIP 11,000
Duration       Since inception i.e., March 2008 
Accumulated sum 65,70,627


So, we saw that consistency is the key to accumulating a large sum. And rather than losing hope when the market is bearish, or getting too hopeful when the market is bullish — investors are advised to stay committed to their investment discipline.

About the scheme: The ABSL Pure Value Fund was launched in March 2008. The scheme's fund manager is Kunal Sangoi. The minimum investment in the scheme is 1,000.

The top 10 holdings in the scheme are SBI, ABSL MF, Divi's Labs, Ramkrishna Forgings, IndusInd Bank, ICICI Bank, Poonawalla Fincorp, Bandhan Bank, UPL and SBI Life Insurance Corp.

The maximum sectoral allocation has been made to banks, finance, pharma, mutual fund, industrial products, chemicals, aerospace and defence.

(Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.)

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First Published: 12 Oct 2022, 08:27 AM IST