Mutual fund investments can help an investor create a handsome amount if the investment is for the long-term. If a person starts earning in the early phase of his life, say 25 years of age, then he or she can become a rich person quite early in comparison to others. At the time of retirement, such people find massive amounts of money in their retirement corpus. So, financial planning and investment goals are quite important for an investor and one should start an investment as early as possible. According to the tax and investment experts, if a person is investing in mutual funds keeping long-term perspective in mind, he or she can expect a higher maturity amount at the time of one's retirement as he or she would be getting the compounding benefit on one's interest.

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Speaking on how a small investment in equity mutual fund can become a large amount at the time of one's retirement, Retired Colonel Sanjeev Govila, CEO at Ham Fauji Initiative said, "Suppose a person starts earning at the age of 25, then he or she has 35 years in hand for creating a retirement fund. If he or she invests Rs 5,000 in equity mutual fund through a systematic investment plan or SIP, he or she will get Rs 11.6 lakh after 10 years. This Rs 11.6 lakh will become Rs 50 lakh after 20 years when the investor will be only 45 years of age. Further continuing this Rs 5,000 monthly SIP for next 15 years till one's retirement he or she will have Rs 3.5 crore in retirement corpus through this single SIP investment."

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However, the Govila warned investors who have a short-term perspective in mind by saying, "Equity mutual funds are not suitable for small-term investment because, in a short-term perspective, volatility in the equity market negate the chances of proper indexation of the NAVs. So, debt-funds are more suitable for such short-term investments." Suggesting investors start investments as early as one can Govila added, "One should know ones investment goal and according to that choose the investment tool to achieve that goal."