Magic of compounding: An investment of ₹1 lakh in this mutual fund would have become ₹7.8 lakh in 15 years

livemint.com:

compounding are so profound that it is referred to as magic. And rightly so! From Benjamin Graham to Warren Buffett, all doyens of investment have acknowledged its power, and lauded it too. The great scientist Albert Einstein even referred to compounding as the eighth wonder of the world.

Here we handpick one equity mutual fund scheme on a random basis and demonstrate the potent power of compounding through it. Let us suppose, an investor had invested a sum of ₹one lakh in JM Flexi Cap Mutual Fund at the time of its launch in 2008 i.e., during the new fund offer (NFO) or soon after it. It’s astonishing that this investment would have grown massively by now to the tune of around ₹7.8 lakh.

Sounds incredible, but true. JM Flexi Cap Mutual Fund has delivered a CAGR (compound annual growth rate) return of 14.41 percent since inception in Sept 2008. This means if someone had invested ₹1,00,000, it would have grown to ₹7,81,590 (on Dec 31, 2023) in 15 years and three months, shows the data on jmfinancialmf.com.

In one year, the mutual fund scheme has delivered a return of 40.12 percent, which means an investment of ₹1,00,000 would have grown to ₹1,39,990. In three years, the scheme has delivered an annualised return of 26.19 percent, which means if an investor had made an investment of ₹1,00,000 in this scheme, it would have grown double to ₹2,00,069 during this time. In five years, JM Flexicap fund has given a CAGR return of 21.14 percent.

This means if someone had invested ₹one lakh in the scheme, it would have grown to ₹2,60,740. Also, if someone had made an investment 10 years ago, an investment of ₹one lakh would have swelled to ₹5.76 lakh by now (Dec 29, 2023), thus delivering a return of 19.15 percent per annum. (Source