Becoming a crorepati, or a millionaire, is a dream for many. While it may seem daunting at first, the right financial planning & discipline can help you achieve this goal over time. One such popular investment option in India is the systematic investment plan in mutual funds. But how long does it actually take to become a crorepati with a monthly SIP of Rs. 5,000 or Rs. 10,000?

Let’s explore the concept & use a SIP calculator to understand the time & returns needed to reach Rs. 1 crore.

What is Mutual Fund SIP?

A Systematic Investment Plan (SIP) is a method of investing in mutual funds where you invest a fixed sum of money at regular intervals (monthly or quarterly). The advantage of SIP is that it allows you to invest in a disciplined manner, regardless of market conditions, and also benefits from the power of compounding over time.

SIPs provide a way to accumulate wealth over the long term, and their true potential lies in starting early, being consistent, and letting your investments grow.

SIP Calculator: Estimating the time to Become a Crorepati?

Let’s break down two common scenarios in which investing Rs.5,000 monthly with assuming the market return of 12%. And second scenario of investing Rs.10,000 monthly assuming the rate of return would be 12%.

Scenario 1:

A) SIP of Rs.5,000 per month.

Using a SIP calculator, we can estimate that if you invest Rs.5,000 every month for 20, 25, and 30 years at an annual return of 12%, the results would look something like this:

With a SIP of Rs.5,000 you will become a crorepati in somewhere around 25 to 26 years if the average returns remain at 12% annually.

B)SIP of Rs.5,000 per month with a step up of 7% every year

We can estimate that if you invest Rs.5,000 every month with a 7% step up every year for 20, 25, and 30 years at an annual return of 12%, the results would look something like this:

Thus, with a step up of 7% every year and SIP of Rs.5,000 you will become a crorepati in somewhere around 21 to 22 years which is 4-5 years earlier than without a step up.

Scenario 2:

A) SIP of Rs.10,000 per month.

Now let’s consider monthly SIP of Rs.10,000 per month.

With the SIP of Rs.10,000 you could achieve the Rs.1 Crore corpus around 21 years. Further you can grow your corpus up to Rs.3 Crores around 30 years of consistent investing.

B) SIP of Rs.10,000 per month with a step up of 7% every year.

 With a step up of 7% and the SIP of Rs.10,000 you could achieve the Rs.1 Crore corpus in around just 17 years. Further you can grow your corpus up to Rs.6 Crores around 30 years of consistent investing and by increasing your SIP step up.

What Makes SIPs a Smart Way to Reach Rs.1 Crore?

1. Power of Compounding: The earlier you start investing, the more your money benefits from compounding. Even small contributions can add up to large amounts over the years.

2. Rupee Cost Averaging: SIPs help mitigate the impact of market volatility through rupee cost averaging. You buy more units when prices are low and fewer when they are high, averaging out your purchase cost over time.

3. Discipline: SIPs foster financial discipline, ensuring that you save and invest a fixed sum regularly. Over time, this habit can accumulate significant wealth.

4. Affordability: SIPs make investing accessible even to those with limited funds. With a modest amount like Rs.5,000 or Rs.10,000 monthly, you can still make substantial progress toward your financial goals.

How to Achieve Your Goal Faster?

If you wish to accelerate your journey to becoming a crorepati, consider the following strategies:

1. Increase SIP Contributions: As your income grows, increase your SIP contributions. Even small increments can have a big impact on your long-term corpus.

2. Choose the Right Mutual Fund: The returns you earn depend on the type of mutual fund you invest in. Equity mutual funds have the potential for higher returns but come with higher risks. Diversifying your investments can help you manage risk effectively.

3. Start Early: The earlier you start investing, the more time your money has to grow. Even a small SIP can become a substantial amount over time.

4. Review Your SIP Regularly: Monitor your mutual fund’s performance and consider switching to a higher-performing fund if necessary.

Conclusion:

Reaching Rs.1 crore with a monthly SIP of Rs.5,000 or Rs.10,000 is a realistic goal if you stay consistent & patient. Of course, the actual time required will depend on factors like the returns of the mutual funds, market performances, & changes in your investment amount over time.

The key takeaway here is that starting early & investing consistently is the most effective strategy to accumulate wealth. With SIPs, you are not just investing money you are investing your future. So, the sooner you begin, the closer you will be to becoming crorepati.

We at RichVik, also guide the clients throughout their investment journey for optimization of wealth creation vis a vis market condition.

To understand more on the topic as well as to start investments please feel free to contact us:

Phone: +91-9324609115

E-mail: team@richvikwealth.in