Unveiling the Power of Rs 10,000 Monthly SIP: How to accumulate Rs 1 crore with compounding (2024)

FAQs

How much should I invest in SIP monthly to get 1 crore? ›

To earn 1 crore from mutual fund investment in 10 years (annual return is 12%), you need to invest Rs 44,640 every month for the entire tenure. If you can extend the investment horizon by five more years to 15 years, you have to invest Rs 21,020 a month.

To reach ₹1 crore in 20 years through SIP, you might need to invest around ₹5000 per month. However, remember, this is a simplified calculation, and consulting a financial advisor is recommended for personalized planning.

After the first doubling, it will double again in the next 4 years, and then a final time in the subsequent 3 years. Applying the 8:4:3 rule means that your mutual fund investment will quadruple over 15 years and increase eightfold in 21 years.

The 15-15-15 rule suggests investing 15% of your income for 15 years in a mutual fund with 15% annual returns. Compounding is the process of reinvesting earnings to generate more returns. By following this rule, you can achieve long-term financial goals such as accumulating a substantial corpus for future needs.

Here is a fund which has delivered superior returns over a five year period outperforming the index it is benchmarked against. An investment of Rs 10,000 per month via systematic investment plan (SIP) route over a period of five years in Quant Small Cap Fund's growth is worth nearly Rs 19 lakh today.

SIPs can be used for investing in all mutual funds, but they are typically more popular for investing in equity funds. On the other hand, FDs require you to invest a lump sum at once, earning a fixed interest rate until the deposit matures. FDs are widely considered safer, offering guaranteed returns.

Hence, there are approximately 120,382 US Dollars in 1 Crore Indian Rupees. This conversion provides a perspective on the value of a large sum in Indian currency when expressed in US Dollars, a widely used international currency.

How to become crorepati using SIP? ›

SIP Crorepati Route: Consider a scenario where you begin your SIP journey with a monthly investment of Rs 10,000. If you commit to increasing this amount by 5% annually, you can accumulate a substantial sum of Rs 1 crore in approximately 18.3 years, or 220 months.

For example, if an investment scheme promises an 8% annual compounded rate of return, it will take approximately nine years (72 / 8 = 9) to double the invested money.

How the Rule of 72 Works. For example, the Rule of 72 states that $1 invested at an annual fixed interest rate of 10% would take 7.2 years ((72 ÷ 10) = 7.2) to grow to $2. In reality, a 10% investment will take 7.3 years to double (1.10^7.3 = 2). The Rule of 72 is reasonably accurate for low rates of return.

The Rule of 69 is a simple calculation to estimate the time needed for an investment to double if you know the interest rate and if the interest is compounded. For example, if a real estate investor earns twenty percent on an investment, they divide 69 by the 20 percent return and add 0.35 to the result.

Example of Using an SIP Calculator

You aim to have ₹20 lakhs in 5 years and can invest ₹30,000 every month. With an expected annual return of 10%, you plug these numbers into the mutual fund SIP calculator. This means your investment has grown significantly, reaching a maturity value of ₹24.3 lakhs.

How much is Rs. 5,000 for 5 years in SIP? If you invest Rs. 5,000 per month through SIP for 5 years, assuming 12% return. The estimate total returns will be Rs. 1,12,432 and the estimate future value of your investment will be Rs. 4,12,431.

Consider investing Rs 15,000 per month for 15 years and earning 15% returns. After 15 years, the total wealth will be Rs 1,00,27,601 (Rs. 1 crore). According to the compounding principle, if we implement these very same returns and contributions for another 15 years, the amount we accumulate grows enormously.