The gap between the rates is not a few points. It is whole doublings.
Same Rs 10L, same thirty years, three different returns. Count the doublings each one buys you, then look at where the money lands.
| Rs 10L . held 30 years |
Years per double |
Becomes |
| 12 percent a year | 6.0 | Rs 3.0 cr |
| 8 percent a year | 9.0 | Rs 1.0 cr |
| 6 percent a year | 12.0 | Rs 57 lakh |
Twelve percent buys five doublings in thirty years. Eight buys just over three. That four point gap does not shave a bit off the end, it deletes close to two doublings, and the last one is always the biggest. Same thirty years, three times the money.
Here is what made him put the cup down. Twelve percent doubles every six years, eleven every six and a half. Sounds like nothing. Run it thirty years on that same ten lakh and the one percent you never see, a fee, a lazy fund, one panic exit, quietly walks off with about Rs 71 lakh. You did not lose one percent. You lost nearly a quarter of the whole pile.