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It’s a dream for many investors to achieve the milestone of a corpus fund of Rs 1 crore. Achieving this milestone will help you in many ways while financially securing your future. A corpus fund of this size will also alleviate all your worries for the retirement years. With a little planning and a disciplined investment, anyone can achieve the Rs 1 crore target.
Also Read: 5 Mistakes To Avoid When Doing Mutual Fund SIP
In India, Mutual fund investors prefer Systematic Investment Plans (SIPs) to lump sum investments since SIPs allow them to invest a small amount in regular cycles. The SIPs are seen as one of the most preferred ways of building wealth in the long term, specifically for those who can’t invest in lump sum.
The benefit of mutual fund SIP schemes is that you can start investing with as low as Rs 100 per month. The SIP amount can be increased or decreased based on the investor’s income and financial goals.
What Is SIP?
A Systematic Investment Plan (SIP) is a type of investment vehicle that allows an investor to invest a specified amount of money in a mutual fund scheme regularly. SIP investments can be done weekly, monthly, quarterly or yearly. Even a few mutual fund houses allowed daily SIPs.
The disciplined investment option is gaining popularity among Indian investors since it provides the benefit of rupee cost averaging, which averages out increases and decreases in Net Asset Value (NAV). As a result, an investor can invest methodically without having to worry about market volatility.
SIPs provide compound growth, allowing investors to develop a large corpus if they stick with their investment for a long time.
For example, assuming a 12 per cent annual return, a Rs 1,000 SIP per month will help you accumulate wealth worth Rs 2.32 lakh over 10 years.
Similarly, SIPs of Rs 5,000, Rs 10,000, and Rs 15,000 can be quite effective in building Rs 1 crore corpus fund. If you continue with your investments for a long time, you can easily become a crorepati.
How to build Rs 1 crore corpus fund with Rs 5,000 SIP
In 26 years, you can accumulate a Rs 1 crore corpus if you begin investing Rs 5,000 per month in mutual fund SIP. Here the interest rate, let’s assume, remains constant at 12 per cent per annum.
In 26 years, your total investment will be Rs 15,60,000 while you will receive returns of Rs 91,95,560. The total corpus fund after 26 years will grow to Rs 1,07,55,560
Rs 10,000 SIP and Rs 1 crore corpus fund
Let’s see how many years it will take to achieve Rs 1 crore target with a monthly SIP of Rs 10,000, assuming 12 per cent per annum interest rate.
In 20 years, your investment will be Rs 24,00,000, long-term capital gains will be Rs 75,91,479, and the expected maturity amount will be Rs 99,91,479 (approximately Rs 1 crore).
Monthly investment of Rs 15,000 to build Rs 1 crore corpus
It will take you 17 years to accumulate Rs 1 crore if you invest Rs 15,000 every month through SIP and receive a 12% return on your investment.
Your wealth will reach Rs 1,00,18,812 (more than Rs 1 crore) in 17 years, with your long-term capital gains coming in at Rs 69,58,812, Your total investments will amount to Rs 30,60,000.
However, it’s important to note that mutual fund investments are linked to stock markets and equity instruments, which could be risky. The returns on mutual fund SIPs could highly fluctuate with market volatility and macroeconomic conditions. It’s always advisable to seek guidance from a financial planner or an expert before investing.
Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Readers are advised to check with certified experts before making any investment decisions.
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