SIP: How Much Should You Invest To Make Rs 5 Crore In 20 Years?

Reaching a financial milestone like Rs 5 crore may seem daunting, but with disciplined investing and the power of compounding, it is achievable. Systematic Investment Plans (SIPs) in mutual funds offer a practical route to build long-term wealth.

So, how much do you need to invest each month to accumulate Rs 5 crore over a 20-year horizon? Let’s break it down.

SIPs allow investors to invest a fixed amount regularly in mutual funds, making it easier to stay committed to long-term goals. Mutual funds, especially equity-oriented ones, can deliver inflation-beating returns if you stay invested for a long time. The earlier you start, the more time your money gets to grow through compounding.

To estimate how much you need to invest every month, you need to first consider the expected rate of return. Equity mutual funds, on average, have delivered returns of around 12% over the long term. Let's look at how much you need to invest monthly based on three different return scenarios:

To build a corpus of Rs 5 crore in 20 years with an expected annual return of 12%, a monthly SIP of Rs 51,000 would be required. This would result in an estimated total return of around Rs 5.09 crore.

If the annual return is slightly lower at 10%, you would need to invest Rs 66,000 per month to reach a corpus of around Rs 5.05 crore in 20 years.

In a more optimistic scenario, if your mutual fund portfolio delivers 14%, you’d need to invest about Rs 38,000 per month. The estimated returns in 20 years would stand at around Rs 5 crore.

It’s important to chart a well-planned investment roadmap and stay committed to achieve the Rs 5 -rore milestone. You can also diversify your investments across multiple mutual fund categories or asset classes.  

Consistency: Stick to SIPs through market ups and downs. Timing the market often leads to missed opportunities.

Step-up SIPs: Consider increasing your SIP amount annually as your income grows.

To create a Rs 5-crore corpus in 20 years, you must combine discipline, patience and the right investment strategy. Starting early gives your money more time to grow. Even a small delay can significantly raise the monthly amount needed. Use SIP calculators, consult a financial advisor and review your plan periodically.