Mutual Funds, Sept. 26 -- If you stay invested in a mutual fund for a long period, the initial investment can grow multi-fold. The rate of return in the later years tends to deliver higher returns because the return in the first few years gets added to the principal, thus allowing it to grow at a faster pace.

This phenomenon is known as compounding, which is lauded several times by the likes of Warren Buffett. Wealth advisors also often assert that investors should stay invested over a long period to meet financial goals.

Here we randomly handpick one mutual fund scheme (Kotak Mid Cap Fund-Direct) to demonstrate the power of compounding.

We assume that if someone had invested Rs.one lakh a few years ago, then how much would this have g...