To accumulate ₹1 crore through Systematic Investment Plans (SIPs) in mutual funds, you need to invest regularly and take advantage of compound interest. Here’s a simple plan:
Step 1: Start Early
Starting early is crucial because it allows your money more time to grow. Even small investments can accumulate into significant amounts over time due to compounding.
Step 2: Choose the Right SIP Amount
The amount you invest monthly in a SIP will determine how quickly you reach ₹1 crore. Let’s assume an average return of 12% per annum from equity mutual funds. Here’s an estimate of how much you need to invest:
- ₹5,000 per month: It would take around 30 years to reach ₹1 crore.
- ₹10,000 per month: It would take about 20 years to accumulate ₹1 crore.
- ₹15,000 per month: You could reach ₹1 crore in roughly 15 years.
The higher the SIP amount, the faster you’ll reach your goal.
Step 3: Choose Equity Mutual Funds
Equity mutual funds usually provide higher returns over the long term compared to debt funds. Opt for well-diversified, high-performing equity funds for maximum growth potential.
Step 4: Stay Consistent
Stick to your SIP plan without withdrawing your money. This will allow compounding to work its magic.
Step 5: Increase SIP Amount Over Time
If possible, increase your SIP amount annually to adjust for inflation and growing income. Even a 10% increase per year can significantly reduce the time to achieve your target.
By investing consistently, choosing the right funds, and starting early, you can easily reach the ₹1 crore goal over time.
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