Earning Rs 1 crore seems tempting to many people because such a huge amount could provide a comfortable and financially secure life. But it cannot happen overnight. Besides savings, you will have to adopt a clear financial strategy, follow a disciplined approach, and most importantly, invest strategically. One smart way to make Rs 1 crore is to opt for a Systematic Investment Plan (SIP) and watch your returns multiply over time with the help of compounding.
But how much should you invest to reach your goal of Rs 1 crore? The answer depends on a number of factors, including your timeframe, and expected rate of return. That’s where an SIP calculator comes in. With an SIP calculator, you can find out how much you need to invest each month to reach your goal of becoming a “crorepati”.
How to use an SIP calculator?
Most reputable financial platforms offer an SIP calculator on their official websites for free. Here’s how to use it:
– Select the investment amount you plan to invest monthly
– Select the number of years you plan to stay invested for
– Select the expected return rate
Based on the results displayed by the calculator, you can decide on your monthly SIP investment amount and the investment time period to reach the Rs 1 crore goal.
- Investment needed to earn Rs 1 crore in 20 years
Using an SIP calculator, you can ascertain that with an expected rate of return of 12% on an equity mutual fund, you would need to invest Rs 10,010 for 20 years to get approximately Rs 1 crore at the time of maturity.
- Investment needed to earn Rs 1 crore in 15 years
If you invest around Rs 19,830 per month in SIPs through mutual funds, with an average return of 12%, you will reach your goal of Rs 1 crore in 15 years. Of course, mutual fund returns can vary year-to-year, but long-term SIPs tend to see a lesser impact from market fluctuations. So, if you are consistent with your investments, you should be on track to reach your target.
- Investment needed to earn Rs 1 crore in 10 years
To earn Rs 1 crore in 10 years, you would need to invest close to Rs 43,050 per month in an aggressive portfolio (returns are assumed at 12% per annum). In case you start an SIP investment with around Rs 30,000 per month, you can also gradually increase your SIP through the years through the step-up option.
Why are SIPs helpful in making a huge corpus like Rs 1 crore?
Most experts believe that SIPs are a convenient way to invest in mutual funds and accumulate a large corpus, especially for investors who cannot make a lump sum investment.
With SIPs, you can set up a regular investment schedule (weekly, monthly, quarterly, etc.), and the amount can be deducted automatically from your bank account. This makes it easy to stay committed to your investment plan over a long time.
Also, when you invest in an SIP at regular intervals, the strategy of rupee cost averaging helps you buy more units when prices are low and fewer units when prices are high. Over time, this helps to average out the cost of your investment and maximise returns.
Closing thoughts
With the right SIP investment, it is possible to save Rs 1 crore. However, it is important to stick to your SIP schedule and stay invested for the long term, irrespective of the market volatility. This is because the power of compounding plays a significant role in multiplying your wealth over time.
