Introduction: The Patience Premium
Imagine this: You meet two colleagues at work, both investing in equity mutual funds.
- Amit started SIPs in 2021, invested heavily, but by 2022, when markets fell, he panicked, stopped investing, and even withdrew part of his money.
- Neha, on the other hand, started SIPs in 2012. Over the years, she witnessed crashes (2013 taper tantrum, 2015 slowdown, 2020 COVID crash), but she continued to invest steadily for over 10 years.
Who do you think ended up wealthier?
👉 It was Neha—because she gave her investments time to compound and did not treat equity as a 1–2 year gamble.
This story highlights the hidden truth: Equity mutual funds reward patience, discipline, and a 10-year mindset.
1. Equity = Ownership, Not a Lottery Ticket
When you invest in equity mutual funds, you’re not buying lottery tickets or quick profits—you’re buying ownership in businesses.
- Think about Infosys, HDFC Bank, or Asian Paints. Did these companies become market leaders in a year? No. It took decades of growth.
- Equity mutual funds pool money to invest in such businesses. For them to grow profits and increase stock value, time is essential.
📌 Short-term (1–2 years): Stock prices swing due to elections, inflation, interest rate hikes, or global news.
📌 Long-term (10+ years): Prices align with the earnings growth of companies.
👉 The lottery mindset kills wealth. The ownership mindset creates it.
2. The Power of Compounding Needs Time
Compounding is called the 8th wonder of the world—but it’s also the slowest starter.
Let’s break it down with SIP examples:
- Riya invests ₹10,000/month for 3 years in equity mutual funds → invests ₹3.6 lakh → grows to ~₹4.4 lakh at 12% CAGR.
- Arjun invests ₹10,000/month for 10 years in equity mutual funds → invests ₹12 lakh → grows to ~₹23.2 lakh at 12% CAGR.
👉 The difference is not just in the amount invested, but in time.
By the 7th–8th year, compounding starts accelerating, and the last 2–3 years often add more wealth than the first 7 years combined.
That’s why a 10-year horizon is critical—without it, you exit just when compounding begins to snowball.
3. Why 10 Years? The Market Cycle Logic
Equity markets exhibit cyclical behavior, characterized by bull runs, corrections, and periods of consolidation.
- 1–3 years: Returns can be highly volatile, ranging from a loss of 30% to a gain of 50%.
- 5 years: Chances of negative returns reduce significantly.
- 10+ years: Historically, Indian equity markets have consistently delivered an 8–12% CAGR, despite multiple crises.
📊 Example from Indian history:
- 2008 Global Financial Crisis: Nifty fell ~50%.
- 2013 Currency Crisis: Nifty corrected sharply.
- 2020 COVID crash: Nifty fell ~38% in a month.
Yet, if you had invested in 2008 and held until 2018, your portfolio grew at a 11–12% CAGR.
👉 One complete cycle doesn’t guarantee wealth—but two to three cycles (10+ years) almost always do.
4. Real-Life Example: SIPs Across Crises
Let’s take an investor who started SIPs of ₹10,000 in January 2008 in equity mutual funds.
- By December 2008 → portfolio in red (~–20%).
- By 2013, → portfolio back to breakeven.
- By 2018, → portfolio had doubled.
- By 2023, → portfolio had nearly tripled.
👉 The same SIP that looked like a “mistake” in the first year became financial freedom after a decade.
Lesson: The first few years test your patience, the later years reward it.
5. The Behavioural Advantage of a 10-Year Horizon
Behavioral finance shows that investors are their own worst enemies.
Short-term investors often:
- Panic during market crashes and redeem at losses.
- Chase top-performing funds and switch too often.
- Stop SIPs during bear markets (precisely when they should continue).
Long-term investors with a 10-year horizon:
- Treat volatility as temporary noise.
- Continue SIPs and even increase investment during dips.
- Reap higher returns because they don’t let emotions control decisions.
👉 Discipline + patience = real alpha.
6. Why 10 Years Is Especially Relevant in India
India is not a mature, slow-growing economy—it’s a developing giant.
Key growth drivers:
- Demographics: Young workforce with rising incomes.
- Consumption: Urbanization + rural demand.
- Reforms: GST, digitization, infrastructure push.
- Globalization: India emerging as a hub for IT, pharma, and manufacturing.
But these themes don’t play out in a year. For example:
- The GST rollout in 2017 caused short-term pain but boosted tax compliance and business efficiency by 2022–23.
- The COVID-19 shock in 2020 slowed India’s GDP, but by 2023, it had become the fastest-growing major economy in the world.
👉 These transformations require a 10-year lens to see wealth creation.
7. Practical Tips for Equity Mutual Fund Investors
✅ Match horizon with goals:
- 1–3 years → Debt or hybrid funds, not equity.
- 5–7 years → Partial equity, partial debt.
- Over the past decade, equity mutual funds have dominated allocation.
✅ Use SIPs, not lump sum (unless in crashes):
SIPs smooth entry points, reduce timing risk, and enforce discipline.
✅ Don’t check NAV daily:
Track performance yearly, not weekly. Obsession kills patience.
✅ Rebalance once a year:
If equity rallies too much, shift profits into debt to maintain allocation.
✅ Work with an MFD (Mutual Fund Distributor):
DIY apps display numbers, but an MFD provides guidance during crashes and ensures you stay aligned with your goals.
8. Comparison: 3 Years vs 5 Years vs 10 Years in Equity
| Investment Horizon | Probability of Positive Returns (Nifty 50, Historical Data) | Typical CAGR Range | Risk of Capital Loss |
| 3 Years | ~65–70% | –20% to +25% | High |
| 5 Years | ~85–90% | 6% to 15% | Moderate |
| 10+ Years | ~95–100% | 8% to 12% | Very Low |
👉 Clearly, the longer you stay, the higher your odds of positive returns.
FAQs on Equity Mutual Funds and the 10-Year Mindset
1. Can equity mutual funds give good returns in 3 years?
Yes, they can, but it’s not guaranteed. In three years, your portfolio could deliver returns of 40% or more or 20% or less, depending on market conditions. That’s why 3-year money is better kept in debt funds or hybrid funds.
2. Why is 10 years considered the magic number for equity funds?
Because it typically spans at least 2–3 complete market cycles—encompassing booms, corrections, and recoveries. Over the past decade, the noise of short-term volatility has subsided, and business fundamentals have driven returns.
3. What if I need money in 10 years?
For short- and medium-term needs (such as buying a car, funding a wedding, or making a house down payment), park your money in liquid, short-duration debt funds or FDs. Only money you won’t need for a decade should go into equity mutual funds.
4. Is SIP enough to create wealth in equity funds?
Yes. SIPs help you average cost, reduce timing risk, and build discipline. However, remember that SIP + time (10+ years) is what makes wealth creation truly powerful. Stopping SIPs too soon kills the compounding effect.
5. Can young investors go 100% equity?
Technically, yes, but it’s risky. Even 25-year-olds should maintain 10–20% of their investments in debt funds for emergencies and stability. A balanced allocation prevents panic selling during market crashes.
6. Are equity funds safer than stocks for 10 years?
Yes. Diversified equity mutual funds spread risk across 30–100 companies, unlike direct stocks. Over the past 10 years, they have generally delivered smoother and more consistent returns than betting on individual companies.
7. Should I stop SIPs if markets fall?
Absolutely not. Falling markets mean you buy more units at cheaper prices. This lowers your average cost and boosts long-term returns. The worst time to stop SIPs is during a crash.
8. What role does an MFD (Mutual Fund Distributor) play?
- Helps match your goals with the right fund categories.
- Prevents panic-driven redemptions.
- Explains risks and keeps you disciplined.
- Provides clarity on rebalancing between equity and debt.
👉 DIY platforms give you transactions. MFDs offer emotional support and guidance, which is equally important.
Final Words: Equity Is a Marathon, Not a Sprint
Equity mutual funds are wealth-creation machines—but only for investors with patience and discipline. A 1–3 year mindset turns equity into a gamble. A 10-year mindset turns it into a proven path to financial freedom.
- Equity = volatile in the short term.
- Equity = rewarding in the long term.
- Patience + discipline = real wealth.
👉 If you want wealth, give your money time. Equity rewards the patient, not the hasty.
Disclaimer
The information provided in this blog is for educational purposes only and should not be considered as financial, investment, or tax advice. Please consult a qualified financial advisor before making any investment decisions.
VSJ FinMart is an AMFI-registered mutual fund distributor (MFD) and does not provide investment advisory services. Mutual fund investments are subject to market risks; please read all scheme-related documents carefully before investing.