Rs 11,000 SIP: Time Required To Reach Rs 1.5 Crore

The investment landscape in India has significantly transformed in the last few years with the emergence of new-age fintech companies. The tech-driven platforms have made wealth accumulation more convenient by increasing access to a wide range of investment instruments. A disciplined approach and consistent investment over a long-term horizon can help investors reach a remarkable milestone like Rs 1 crore without any hassle. If you are looking forward to becoming a crorepati, systematic investment plans (SIPs) could be a suitable option.

A mutual fund SIP allows investors to invest a fixed amount at a regular interval, like every month, depending on their financial goals. In recent years, SIPs have become popular among investors in India due to multiple factors like higher returns compared to traditional instruments, better flexibility and the option to invest small amounts every month.

However, it could be confusing to decide how long you should stay invested. Generally, financial experts advise a long-term horizon for SIP investments to maximise the benefits of rupee cost averaging and the power of compounding. The longer the tenure, the higher your earnings from SIPs. As per industry trends, over a long-term horizon, most equity mutual fund SIPs have given double-digit returns.

If you are looking forward to building a corpus of Rs 1.5 crore with a monthly SIP of 11,000, a long-term strategy could be crucial for achieving the target. It may seem difficult to reach your goal of Rs 1.5 crore with just Rs 11,000 per month. However, it can be easily achieved.

As per historical trends, equity mutual funds have offered average returns of 12% per annum for SIP investments over a long-term horizon.

Assuming an average annual return of 12%, let’s see how long it will take to build a corpus worth Rs 1.5 crore.

• Monthly Investment: Rs 11,000

• Investment duration: 23 years

• Expected interest rate: 12% per annum

• Invested amount: Rs 30,36,000  

• Estimated returns: Rs 1,31,67,630

• Total value: Rs 1,62,03,630

As seen from the above calculation, you can easily surpass the target of Rs 1.5 crore in nearly 23 years with a modest investment of Rs 11,000 per month via SIPs at an assumed return of 12% per annum.  

For many investors, a commitment of Rs 11,000 every month for 23 years could be financially straining. However, you can achieve the target of a Rs 1.5-crore corpus within a shorter tenure through a step-up SIP. Many mutual fund SIPs come with the step-up feature, which allows investors to increase their investments by a certain percentage periodically, generally every year.

With a 10% annual step-up, you can conveniently achieve the target of Rs 1.5 crore in just 18 years through the same SIP investment of Rs 11,000 per month. Let’s see the calculation:

Rs 11,000 Monthly SIP With 10% Annual Step-up  

• Monthly Investment: Rs 11,000

• Investment duration: 18 years

• Annual Step Up: 10%

• Expected interest rate: 12% per annum

• Invested amount: Rs 60,19,090

• Estimated returns: Rs 98,37,038

• Total value: Rs 1,58,56,129

A long-term horizon is crucial for accumulating Rs 1.5 crore through a monthly SIP of Rs 11,000. The extended tenure helps in mitigating market risks through rupee-cost averaging. On the other hand, the power of compounding helps in increasing overall profitability. So, it’s important to build a long-term investment plan to reach a big target like Rs. 1.5 crore. However, as the SIP returns are not guaranteed due to market volatility, investors should evaluate all risk factors before investing.

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