Setting up an investment in a mutual fund through a Systematic Investment Plan (SIP) has become one of the most trustworthy ways to gain long-term wealth. Average annual returns of about 12 to 14% and disciplined SIP investors can work their way up to a handsome corpus over time.
Now, for how long would it take for your monthly investments through SIP to grow into ₹1 crore? This would depend on whether you invest ₹2,000, ₹5,000, or ₹10,000. In this article, we will do an insight calculation on how you can become a millionaire.
How SIP Works: The Magic of Compounding
SIP is an acronym for Systematic Investment Plan. Here, the investor invests a fixed amount at regular intervals of time in a mutual fund scheme (be it monthly, quarterly, etc.). The major advantage is compounding; that is, your returns will start generating returns on their own over time. With that consideration, the longer you stay invested, the more these returns will multiply.
Core Benefits of the SIP Scheme
- Start with as little as ₹250 a month.
- No upper limit for investment.
- Flexible increase in SIP amount.
- Disciplined, hassle-free investing.
- It’s now time to see how these different monthly payments will help you attain ₹1 crore.
When Will Your SIP Turn Into ₹1 Crore?
1. Investing ₹2,000 Per Month
- Expected Return: 12% annually
- Time Required: ~35 years
- Total Investment: ₹8.4 lakhs
- Final Corpus: ₹1.02 crores
If the return increases to 14%, you could reach ₹1 crore in 32 years.
2. Investing ₹5,000 Per Month
- Expected Return: 12% annually
- Time Required: ~30 years
- Total Investment: ₹18 lakhs
- Final Corpus: ₹1.54 crores
At a 14% return, the time reduces to 25 years.
3. Investing ₹10,000 Per Month
- Expected Return: 12% annually
- Time Required: ~25 years
- Total Investment: ₹30 lakhs
- Final Corpus: ₹1.70 crores
With a 14% return, you could achieve ₹1 crore in just 20 years.