A bank balance of Rs1 crore is tempting to any individual – be it a middle-class individual or a salaried individual. To enjoy a content and comfortable life, one needs to have a financially secure future. And to be financially secured, one should adopt a well-defined financial strategy and regularly exercise financial discipline. This embraces saving more, making learned investment decisions, and finally cutting down on overheads. But how much should one invest to earn Rs1 crore? This article will serve as a guide for the same.
With interest rates falling steadily across safe investment options such as bank FDs, Sukanya Samriddhi, PPF, etc. it is now going to take even more time for individuals to accumulate Rs 1 crore. Nowadays, investors want to earn inflation-beating returns. This is so that they have an excellent corpus when they retire, which will enable them to live a financially comfortable life post-retirement.
Mutual funds are increasingly becoming a popular investment option among risk-averse investors. Those who do not wish to invest directly in stocks fearing volatility, are now moving towards equity mutual funds. To earn Rs 1 crore through a Systematic Investment Plan, commonly known as SIP, may look unattainable and overwhelming. However, it is indeed possible with efficient planning and execution.
What is SIP?
SIP is a method of investing in mutual funds. Under SIP investments, investors can regularly invest a specific amount of money in their desired mutual fund schemes at regular intervals for a predetermined period. It is a planned approach towards mutual fund investment. Monthly investments in SIPs for an extended period can help you generate wealth with the power of compounding. Equity funds are considered as one of the best instruments to produce wealth quickly given that you are comfortable bearing with volatility. Risk-averse investors might consider opting for index mutual funds as they are less volatile and offer an attractive rate of return in the long run. These mutual funds have the potential to provide returns around 12% p.a. over the long term.
How much should you invest in SIP to gather Rs 1 crore:
Assuming long-term CAGR of around 12% p.a., you can accumulate Rs1 crore in 20 years by investing at least Rs 10,000 each month. You can use an SIP calculator to help you understand the amount required to invest each month in reaching Rs 1 crore. An SIP return calculator helps to understand the future value of your investments. You can achieve this goal quicker if you increase your monthly SIP of Rs 10,000 each year by 10%. A step-up SIP follows this concept. IF you are a salaried individual, increasing your SIP amount by 10% would not be difficult. S. If you do so, you will be able to accumulate over Rs 1 crore corpus in about 17 years assuming a CAGR of 12%. Happy investing!