Rs 10,000 Monthly SIP: Can You Really Become A Crorepati Before 40?

The dream of becoming a crorepati is a remarkable financial milestone for any investor. With the rapidly changing financial services industry in India, investors have an ample and diverse range of investment choices these days. Often, mutual fund Systematic Investment Plans (SIPs) are preferred by investors in India due to their potential to offer higher returns compared to traditional instruments.

Achieving your crorepati goal before reaching the age of 40 is not a difficult task. You can even start with a modest investment through SIPs to build a sizable corpus. You just need to begin your investment journey early and remain consistent over a long-term horizon. SIPs offer enormous flexibility and allow you to choose the tenure and investment amount as per your financial goal.

Traditionally, equity mutual fund SIPs have offered an average return of 12% per annum.  Let’s see at this assumed interest rate per annum, over a tenure of 15 years, how you can reach your crorepati goal by the age of 40, leveraging the power of compounding effectively. 

Monthly investment: Rs 10,000

Tenure: 15 years

Expected returns: 12%

Total investment: Rs 18 lakh

Estimated returns: Rs 32.45 lakh

Total Value: Rs 50.45 lakh crore

As seen from the above calculation, even if you start your investment journey at the age of 25, which is generally the early stage of your employment, the corpus would grow into more than Rs 50 lakh by the time you reach 40 years. So, in order to reach the target of Rs 1 crore with a monthly SIP of Rs 10,000, you may need to start investing early.

It will take 20 years to accumulate nearly Rs 1 crore with a monthly SIP of Rs 10,000 at an assumed interest rate of 12% per annum. Here’s how:

Monthly investment: Rs 10,000

Tenure: 20 years

Expected returns: 12%

Total investment: Rs 24 lakh

Estimated returns: Rs 75.91 lakh

Total Value: Rs 9.91 crore

In the given scenario, it’s advisable to start your monthly SIP at the age of 20 to achieve the crorepati goal by the time you turn 40 years old. However, you can achieve this financial milestone through a step-up SIP. Many mutual fund SIPs come with a step-up option, where you can increase your investment by a certain percentage every year.

For instance, a step-up of 10% per annum could be helpful in accumulating Rs 1.03 crore in 16 years in the given scenario.

It is important to remember that compounding returns depend on market performance. The longer your money stays invested, the more time it has to grow exponentially. This is why starting early is the most crucial element in wealth creation.

To conclude, building a corpus of Rs 1 crore before the age of 40 can be achieved conveniently through financial discipline and consistency. It’s advisable to assess your risk appetite, financial positions and historical SIP trends before investing.