As equity investments have a higher risk but higher reward ratio, they are attractive for portfolios to construct a hedge against inflation. Equity mutual funds are popular for investors with a moderately high to high-risk profile. Equity mutual funds through SIP are the most popular choice for long-term investment. Take into account factors including performance, charges, risk, diversification, and fund manager experience when selecting the mutual funds that are best for your investment objectives. Here, we have taken an example of how much SIP is required to accumulate a corpus of ₹20 Cr in 20 years, for which industry experts have suggested their views which are as follows.
Santosh Navlani, COO, ET Money
To build a corpus of ₹20 crore in 20 years, a person needs to invest ₹2 lakh every month via SIP or ₹2,00,200 to be precise. This is possible if investors receive a 12% compound annual growth rate (CAGR) on their investments.For this, investors can look at a NIFTY 50 index fund with a 5-7-year track record and a low tracking error. If we look at the past 20 years CAGR of the NIFTY 50, ending March 31, 2023, it’s 16.91%.
With index funds, you don’t need to worry about the performance of your scheme, as long as the tracking error is low. You also don’t need to spend extensive time researching and picking the best fund and hoping that it would do well in the future. But it’s better if the investor takes a portfolio approach to investments and follows asset allocation. Instead of investing all the money in equities, the investors can decide the asset allocation between equity, debt and gold, and try to maintain it by rebalancing at least once a year.
Gautam Kalia, SVP and Head Super Investor at Sharekhan by BNP Paribas
It is always good to plan investment in the early stage of life as it helps to create a good corpus with a small amount of investment. To create a corpus of Rs.20 Crs in 20 years, investors should start the SIP of Rs.2,02,000pm assuming a return of 12%pa. If the investor is ready to step up the SIP amount every year then he can create this corpus by starting the SIP with Rs.1,07,000 per month and increasing this SIP amount every year by 10%.
| Scheme Name | Category | % of Allocation | SIP Amount |
| ICICI Prudential Bluechip Fund - Growth | Large Cap | 30% | 60,000 |
| Kotak Equity Opportunities Fund - Reg - Growth | Large & Mid | 15% | 30,000 |
| Mirae Asset Midcap Fund - Reg - Growth | Mid | 25% | 21,000 |
| Tata Small Cap Fund - Reg - Growth | Small | 25% | 10,000 |
| SBI Small Cap Fund - Growth | Small | 25% | 20,000 |
| HDFC Flexi Cap Fund - Growth | Flexi Cap | 30% | 61,000 |
| ₹202,000 |
Lakshmi Iyer, CEO-Investment & Strategy, Kotak Investment Advisors Limited
Assuming an average of 12% compounded, ₹2 lacs per month is needed for 20 Cr corpus in 20 years. The amount may increase: or decrease basis return Assumptions. Markets do not offer linear returns, hence longevity in markets is important. Opt for a flexi cap or multi cap fund for the same.
Amit Gupta, MD, SAG Infotech
You should always allocate mutual fund assets in accordance with your goals, investment horizon, and risk profile. You may wish to look into equity mutual funds since you plan to invest for the long term. Equity investors with a moderate risk tolerance may find multi-cap mutual funds intriguing. A 5% allocation was given to sector funds (utilities, healthcare, and real estate) since they concentrate their efforts on a specific type of firm, thereby increasing risk.
In 20 years, if you invest Rs. 70 lakhs and receive a 12% annual return, you may have a corpus of Rs. 6.75 crores and not the demanding returns i.e. INR 20 crores by any means. However, it's important to remember that this is only a hypothetical situation, and actual outcomes may differ. A corpus is a sum of money set aside or invested with a specific goal in mind. That sum of money would remain in your account after 20 years if you invested Rs. 70 lakh at a 12% annual return.
The right definition of risk and the selection of tactics that work with it are essential. For instance, you should invest mostly in large-cap funds if you have a low-risk tolerance. If you have a moderate level of risk tolerance, you can invest in flexi-cap mutual funds. With the help of mid-cap, small-cap, sector, and theme funds, you may invest in high-risk projects. You must, however, decide how much of your money will go towards these programmes.
Still few Mutual funds can help in the achievement of targeted returns such as:
1. Pro Investing by Aditya Birla Sun Life Mutual Fund.
2. ICICI Prudential India Opportunities Fund
3. ICICI Prudential Midcap Fund-IDCW.
4. ICICI Prudential Midcap Fund-Growth.
Ankush Bali, Financial Portfolio Manager- PGDBF | LIMRA | MDRT | AMFI REGISTERED
A corpus of 20cr can be built in 20 years if you invest 2.2lakhs every month. Or u can increase the time frame. If want 20 Cr or corpus invest 1.2 lakhs for 25 years. Or 70k for 30 years @12% in all scenarios. If you are going by sip step up then it becomes much lesser.
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