Crorepati At 45 Years Vs Crorepati At 35 Years — Investment Gap Explained

Building a corpus of Rs 1 crore is considered a major milestone in securing one's financial future. Though it may sound daunting, this ambitious goal can be achieved with a suitable strategy and smart money management.

Even by investing small amounts regularly, you can build a corpus worth Rs 1 crore over the years. It is important to remain consistent and choose assets that offer higher returns compared to traditional instruments. For an ambitious goal like building a corpus of Rs 1 crore, systematic investment plans (SIPs) in mutual funds could be suitable due to their potential to offer market-linked returns.

You can choose the amount and investment horizon that aligns with your financial profile to achieve your target of Rs 1 crore through SIPs. A long-term financial strategy and uninterrupted investments could help you conveniently achieve your crorepati goal due to the power of compounding. Investment tenure and expected returns play a crucial role in building a sizeable corpus.    

If you start investing at the age of 25, here's how SIPs can help you reach the Rs 1-crore goal under two timelines — by the ages of 35 and 45.

Scenario 1: Investing In Mutual Fund SIPs To Become Crorepati At 35

Monthly investment: Rs 45,000

Tenure: 10 years

Total investment: Rs 54 lakh

Expected rate of return: 12% per annum

Estimated returns: Rs 50.55 lakh

Maturity corpus: Rs 1.04 crore

Scenario 2: Investing In Mutual Fund SIPs To Become Crorepati At 45

Monthly investment: Rs 11,000

Tenure: 20 years

Total investment: Rs 26.4 lakh

Expected rate of return: 12% per annum

Estimated returns: Rs 83.5 lakh  

Maturity corpus: Rs 1.09 crore

As per the above scenarios, you can easily build a corpus of Rs 1 crore through SIPs by the ages of 35 and 45 years by beginning your investment journey at the age of 25. At an assumed rate of return of 12% per annum, you can become a crorepati by the age of 35 with a monthly SIP of Rs 45,000. On the other hand, you may require a much lesser monthly SIP of Rs 11,000 to reach the target of Rs 1 crore by the age of 45 in the same scenario. As the above calculations indicate, here the investment horizon plays a crucial role in building your ambitious corpus.    

A long-term investment strategy often helps in achieving higher returns through SIPs. As seen from the above scenarios, a gap of 10 years in investment tenure significantly reduces your monthly investments to build a corpus of Rs 1 crore. It is advisable to review your investment amount, tenure and estimated returns frequently to build a corpus of Rs 1 crore. You can address any gap in the investment trajectory by increasing the monthly SIP or by extending the investment horizon. Equity-linked SIPs generally offer higher returns over a long-term tenure due to the power of compounding.

Starting investments early leverages extended tenure, allowing even modest SIPs to grow into crores through the power of compounding.  In the world of wealth creation, time is your most valuable asset, not just the amount of money you invest.

To conclude, accumulating Rs 1 crore through SIPs is not a difficult task. However, as equity mutual fund investments are prone to market risks, it is advisable to assess all key factors before investing.