Rs 14,000 SIP: Time Required To Reach Rs 1 Crore

Reaching a corpus of Rs 1 crore is a significant financial goal for many Indians. It is regarded as a step towards success and financial freedom by many. In pursuit of this goal, many investors have now started exploring instruments like Systematic Investment Plans (SIPs), which offer more flexibility and market-linked returns compared to traditional tools like fixed deposits (FDs).   

For building a corpus of Rs 1 crore, SIPs could be a suitable choice for investors who can’t afford to invest a large amount upfront. SIPs allow investing a fixed amount at periodic intervals, for instance, every month, in mutual funds to build a large corpus. Over time, the power of compounding helps the invested amount grow significantly. In India, equity mutual funds have traditionally provided annual returns in the range of 12-15%. However, actual returns can vary, depending on market conditions.

If you are planning to achieve your crorepati goal with a monthly SIP of Rs 14,000, let’s see how long it will take to reach the target. Here, we have assumed an estimated return of 12% per annum for building the intended corpus.

Monthly investment: Rs 14,000

Tenure: 18.5 years

Total investment: Rs 31.08 lakh

Expected rate of return: 12%

Estimated returns: Rs 75.24 lakh

Maturity corpus: Rs 1.06 crore

It’s important to note that the actual returns on SIP investments may vary due to market volatility and taxation.

As seen from the above calculation, it may take more than 18 years to build a corpus of Rs 1 crore with a monthly SIP of Rs 14,000 at an assumed interest rate of 12% per annum.  

However, with a step-up SIP feature, you can increase the investments every year by a fixed percentage to reach the goal faster. For instance, with a 10% annual step-up, the same SIP of Rs 14,000 could grow into Rs 1.01 crore in just 14 years at an assumed annual return of 12%.

The exact time hinges on an important factor: the annual rate of return you achieve on your mutual fund investments. The most crucial takeaway is the importance of starting early and remaining invested over a long-term horizon. The earlier you start, the less you need to invest. Remaining invested over a longer tenure can lead to higher gains due to the power of compounding.   

Further, diversification across equity, debt, real estate and gold can help minimise risks, while ensuring steady returns. It’s important to note that SIP investments are linked to market risks. It could be a prudent step to analyse all risk factors and your financial condition before investing.