Long-term investing offers substantial growth potential, especially with a structured approach combining balanced and equity funds. This example explores the potential returns of investing ₹15 lakh in the HDFC Balanced Advantage Fund with a monthly STP (Systematic Transfer Plan) of ₹15,000 to the HDFC Mid-Cap Opportunities Fund, illustrating how strategic fund choices can maximize returns over a decade.
Fund Details and Growth Rates:
- HDFC Balanced Advantage Fund – Direct (Hybrid Fund): A hybrid fund that diversifies between equity (stocks) and debt (fixed income) investments, balancing growth potential with moderate risk. The HDFC Balanced Advantage Fund has provided a 3-year CAGR of 23.42%, ideal for investors seeking balanced growth.
- HDFC Mid-Cap Opportunities Fund – Direct (Equity Fund): An equity fund focused on mid-cap stocks that typically offer high growth potential. With a 3-year CAGR of 29.68%, this fund is suited for investors targeting high returns over the long term, albeit with greater volatility than hybrid funds.
Initial Investment and STP Strategy
- One-Time Investment: ₹15 lakh is invested in the HDFC Balanced Advantage Fund, growing independently while monthly STP transfers are made.
- Monthly STP: A fixed amount of ₹15,000 is systematically transferred to the HDFC Mid-Cap Opportunities Fund, enhancing overall portfolio growth by balancing stable returns with targeted equity exposure.
Investment Breakdown and Projected Returns After 10 Years
1. Total Investment:
- One-time initial investment: ₹15 lakh in the HDFC Balanced Advantage Fund.
- Total STP Amount Transferred: Over 10 years, ₹15,000 is transferred monthly to the Mid-Cap Fund, amounting to ₹18 lakh.
2. Returns from Each Fund:
- HDFC Balanced Advantage Fund – Direct:
- Final balance after 10 years, post-STP deductions: ₹61.95 lakh.
- Total earnings from this fund after factoring in STP deductions: ₹46.95 lakh.
- HDFC Mid-Cap Opportunities Fund – Direct (via STP):
- Future value after 10 years: ₹85.30 lakh.
- Total earnings in the Mid-Cap Fund from STP contributions: ₹67.30 lakh.
3. Final Corpus:
- The total corpus after 10 years, combining both funds’ returns, amounts to approximately ₹1.47 crore.
Year-by-Year Growth Breakdown
The following table illustrates the growth each year in both funds, showing the balance after STP deductions in the HDFC Balanced Advantage Fund and the accumulated value in the HDFC Mid-Cap Opportunities Fund, with values rounded to two decimal places.
| Year | Balanced Fund Balance (₹) | Balanced Fund CAGR (%) | Mid-Cap Fund Balance (₹) | Mid-Cap Fund CAGR (%) | Total Corpus (₹) |
|---|---|---|---|---|---|
| 1 | 16,52,712.04 | 23.42 | 2,07,790.26 | 29.68 | 18,60,502.30 |
| 2 | 18,41,189.23 | 23.42 | 4,77,252.67 | 29.68 | 23,18,441.91 |
| 3 | 20,73,807.79 | 23.42 | 8,26,691.53 | 29.68 | 29,00,499.32 |
| 4 | 23,60,905.61 | 23.42 | 12,79,843.84 | 29.68 | 36,40,749.45 |
| 5 | 27,15,241.74 | 23.42 | 18,67,491.75 | 29.68 | 45,82,733.50 |
| 6 | 31,21,192.35 | 23.42 | 26,06,743.02 | 29.68 | 57,27,935.37 |
| 7 | 35,94,713.12 | 23.42 | 35,19,384.67 | 29.68 | 71,14,097.79 |
| 8 | 41,62,241.72 | 23.42 | 46,34,829.99 | 29.68 | 87,97,071.71 |
| 9 | 48,63,457.66 | 23.42 | 60,12,402.95 | 29.68 | 1,08,75,860.61 |
| 10 | 61,95,331.06 | 23.42 | 85,29,683.52 | 29.68 | 1,47,25,014.58 |
Note: The final balance in the HDFC Balanced Advantage Fund after 10 years is approximately ₹61.95 lakh, while the Mid-Cap Fund accumulates to around ₹85.30 lakh, combining for a total corpus of approximately ₹1.47 crore.
Summary of Projected Returns
With an initial investment in the HDFC Balanced Advantage Fund growing at a CAGR of 23.42%, and the Mid-Cap Opportunities Fund at a CAGR of 29.68%, the combined projected corpus after 10 years would be ₹1.47 crore. The regular STP ensures the portfolio balances growth across both funds while managing risk.
Disclaimer: This example is based on the 3-year CAGR of these funds as of October 27, 2024. All calculations are hypothetical and intended for illustrative purposes only. Mutual fund investments are subject to market risks, and past performance is not indicative of future results. Please consult with a financial advisor to understand potential risks and returns before investing.
