How To Become A Crorepati: This 8-4-3 Rule In SIP Can Help You Accumulate Rs 1 Crore

Mutual fund investments have become one of the most popular investment options for Indian investors. The mutual funds offer an opportunity to invest in high return assets like equity instruments without direct exposure to stock markets. Many investors are contributing thousands each month in hopes of achieving higher returns in comparison to traditional instruments, such as Fixed Deposits.

Many middle class investors also see mutual funds and direct stock investments as one of the fastest routes to becoming ‘crorepatis’. The investors are exploring alternatives to stocks and equity instruments due to the sharp fall in benchmark indices in the last few months. Benchmark Nifty 50 has fallen nearly 15% since the all-time high of 26,277 hit on September 27, 2024.

Notably, the monthly mutual fund SIP contribution crossed the Rs 26,000 crore mark for the first time, reaching Rs 26,459 crore, in December 2024. However, even mutual fund SIP investments have not been immune due to the market volatility over the last two months. The mutual fund SIP inflows dropped to a three-month low of Rs 25,999 crore in February.

While financial experts advise against discontinuing SIPs over short-term outlook, this could be an opportunity to invest in equity instruments through mutual funds for long-term gains. Nevertheless, it is always advised to have a more long-term investment horizon to withstand market volatility. While the equity mutual funds offer the potential for higher returns, they also come with significantly higher risk. However, with thorough research and a strategic approach, these funds could provide a path to becoming a ‘crorepati’ in a shorter time frame than one might expect.

One of the simplest rules for this is to adopt the commonly known 8-4-3 technique. This rule is typically used to determine how soon the money can be doubled. This investment strategy has three periods of return: steady, accelerated, and snowball effect. Through this, it is possible to build a corpus of Rs 1 crore in 15 years with a monthly investment of Rs 21,000 through a Systematic Investment Plan.

For instance, if one contributes Rs 21,250 every month for a period of 15 years, the maturity amount at the end of the tenure at an average annual return of 12% will reach Rs 1.07 crore.

In the first eight years of investment, the accumulated amount will be Rs 34.3 lakh. But, in next 4 years this amount will double to Rs 68.5 lakh due to the power of compounding, considering the interest rate remains constant at 12% per annum. After this, the investment corpus will reach Rs 1.07 crore in the three years.

Investors can use this technique to adjust their SIP amounts according to their financial goals and risk appetite.