Mutual Fund?? Is intrest Compounded annualy? Read further?

Question

If I invest Rs.10000 in Icici Prudential Growth Fund for 20 years and suppose get a return of 35% every year, what will be the approximiate amount?Will it e around Rs.20 lakhs?
Ex. First Year Rs.10000+35%=13500
Second Year Rs.13500+35%=18825

they will be like that only.....
Are they compounded?

Answer 1

I'm in the United States so I can only assume that Prudential Growth Fund is the same there as it is here.

First of all, the 35% growth rate is NOT guaranteed. They can predict growth rate based on past performance and future expectectations but there is never a guarantee of how much a fund will go up or down.

The rest of your example is sort of correct if the fund does indeed grow by 35% per year. However, it is not "compounded" like interest rates are. The value of the fund depends on it's market value on any given day and it's value will change on a daily basis. Plus, most funds pay a quarterly dividend so if you have yours set up so that the dividend is automatically reinvested into more shares, those additional shares purchased with the dividend are also being figured into that 35% predicted growth rate.

Answer 2

I am not completely aware of how mutual funds are structured in India. But there are several points you may be missing. First, future performance may not equal past performance. In fact it almost assuradly will not. Over a 20 year period, you can expect the growth rate to mitigate greately. Over that period of time an annual growth rate of 16% would be about as high as you should expect and that would be an exception rather than a rule.
Second, and this is the point that I do not have any knowledge of, what are the tax consequenses in India of your realized mutual fund gains? Will you have to pay taxes on them? If so your after tax return will be much much less.

Assuming there are no taxes and assuming that the rate of return will remain at 35% annually and assuming that you reinvest all of your dividends--all very poor assumptions--then the answer is yes.

Answer 3

Your question shows one main thing...... You don't have a clue how Mutual Funds work. Don't ever invest in anything you don't fully understand. Read a couple of books on Mutual Funds and on general investing. Make sure you understand "asset allocation" and "fees" before you do anything.

BTW: In addition, some of the worst Mutual Funds are managed by Banks, Insurance Companies and Stock Brokers. They also tend to be the most expensive. If your broker even hinted that you can get 35% a year growth.... run from them as fast as you can.

Answer 4

they do no longer compound. A financial corporation account compounds activity, month-to-month quarterly or each year. A mutual fund will enhance or decreases in fee based on the fee of the shares held in the fund. the fee enhance is the traditional of the upward push in the shares held. Mutual money do pay the holders a dividend if the shares they carry pay one. it relatively is the two exceeded directly to the mutual fund shareholders, or reinvested to purchase extra mutual fund shares for the shareholders. each and every shareholder tells the mutual fund what he needs achieved with the dividend. some reinvest the dividends.it relatively is the main suitable thank you to make money. some take it as a quarterly examine from the fund. With Dividend Reinvestment Plans the dividend money buys extra shares for the holder. Then if the inventory fee will enhance, the sharholder has made money the two techniques. in case you reinvest the dividend you're, in effect getting unfastened shares.

Answer 5

y

not intrest it is avg return pa

Answer 6

Yes it is... you got it right !!!