Compounding: How SIP Can Help You Build a 1 Crore
SIP, or Systematic Investment Plan, is a way of investing a fixed amount of money regularly in mutual funds. This method helps you reach your financial goals by making saving a habit and taking advantage of the power of compounding.
If a family has a monthly income of Rs 50,000, monthly expenses of Rs 30,000, and saves Rs 20,000 per month and make FD monthly, it would take them about 25 years to reach 1 crore, assuming 6%p.a and if you invest Rs. 5,000 per month in SIP: Achieve 1 crore in 25 years and 11 months.
To make 1 crore through SIP, you should consider:
- The amount you can invest every month.
- The expected rate of return on your investment.
- The duration of your investment.
The more you invest each month and the longer you invest, the easier it becomes to reach 1 crore. But keep in mind the risks in the market. Choose a mutual fund scheme that matches your risk tolerance and investment goals12.
Here are some examples of how much you need to invest monthly in SIP to make 1 crore, assuming a long-term CAGR of 12%:
- Rs. 5,000 per month: Achieve 1 crore in 25 years and 11 months.
- Rs. 10,000 per month: Reach 1 crore in 20 years.
- Rs. 15,000 per month: Attain 1 crore in 16 years and 10 months.
- Rs. 20,000 per month: Make 1 crore in 14 years and 8 months.
You can use a SIP calculator to estimate your returns based on different parameters. Another interesting fact is that you can speed up reaching your goal by increasing your SIP amount each year by a certain percentage.
Start SIPing now…..
