Crorepati Timeline: Rs 25,000 SIP Vs Rs 10 Lakh Lump Sum

Becoming a 'crorepati' is a dream financial milestone, and for many investors, it may seem an unrealistic goal. But with a well-planned investment strategy and financial discipline, a corpus of Rs 1 crore can be conveniently built in the long run. Mutual funds have emerged as preferred investment tools in the last few years for Indian investors looking for higher returns. You may explore systematic investment plans (SIPs) and lump sum schemes to achieve your crorepati goal.

While SIPs offer enormous flexibility, allowing you to invest small amounts periodically, you can invest a large amount upfront in a lump sum plan. Choosing between these instruments should be based on your financial goal, investment horizon and risk appetite.  

If you want to become a crorepati, should you opt for a Rs 25,000 SIP or a Rs 10 lakh lump sum investment? The key difference lies in the expected rate of return and the investment tenure.

Let’s take a look at the estimated tenures for achieving the target of Rs 1 crore through a monthly SIP of Rs 25,000 and a lump sum of Rs 10,00,000.

Monthly SIP of Rs 25,000 To Accumulate Rs 1 Crore

• Monthly investment: Rs 25,000

• Tenure: 14 years

• Expected interest rate: 12% per annum

• Total investment: Rs 42 lakh

• Estimated returns: Rs 61.39 lakh

• Maturity corpus: Rs 1.03 crore

Rs 10,00,000 Lump Sum To Build Rs 1 Crore Corpus

• Total investment: Rs 10 lakh

• Tenure: 21 years

• Expected interest rate: 12% per annum

• Estimated returns: Rs 98.04 lakh

• Maturity corpus: Rs 1.08 crore

It’s important to note that actual returns may vary from the values mentioned above due to market volatility and fluctuation in interest rates, among other factors.

As the above calculation shows, there will be a gap of almost seven years when it comes to hitting the Rs 1 crore mark with an SIP and lump sum investment.

A monthly SIP of Rs 25,000 can make you a crorepati in just over a decade, with your total investment being significantly less than the target corpus, due to the power of compounding.

The SIP investor reaches the goal in a shorter period, but invests more capital. The lump sum investor takes longer, but achieves a much higher return on the initial principal amount.

If you don’t have a large amount like Rs 10 lakh to invest upfront and want steady returns without worrying about market volatility, the monthly SIP of Rs 25,000 could be a suitable choice to achieve your goal of Rs 1 crore faster.

Both investment options come with their own advantages and limitations. For building a sizable corpus of Rs 1 crore, starting early and staying invested for a longer tenure could be crucial. It’s advisable to assess all risk factors and your financial conditions before investing.

Disclaimer: This article is only for informational purpose. NDTV Profit advises users to consult with their own financial or investment adviser before taking any investment decision.