Amid rising inflation, even those earning Rs 1 lakh a month find it challenging to build a Rs 1 crore corpus. It might seem ambitious, but in reality, the target remains well within reach with the right financial discipline and investment strategy.
Creating wealth is not only about how much an individual earns. It is also about how effectively they save, invest, and allow the money to grow over time. Even a moderate monthly income can transform into a sizeable fortune through consistent savings, smart allocation across equity and the power of compounding.
The key lies in resisting lifestyle inflation and putting a significant portion of your monthly earnings into growth-oriented investments. Also, people must remain committed to long-term goals.
Define Your Savings Target
The first question that comes to mind for several investors is how much money they should save on a monthly basis to invest in reaching the Rs 1-crore target. The ideal investment amount depends on one person to another and is derived through various factors like investment horizon and expected returns.
Next comes the decision to choose the right investment vehicles. Some of the most common options include mutual funds and the Public Provident Fund.
Systematic Investment Plans in mutual funds are often considered the highly recommended way to build substantial wealth over a period of time. When it comes to long-term wealth generation, even small investments in equity funds can allow people to generate big corpus.
Rs 1 Crore Target: How Much To Invest?
While earning Ra 1 lakh per month might seem modest, investors must set aside a portion of it towards building a Rs 1 crore corpus. This needs to be done on a monthly basis to achieve the target on time.
It must be noted that the timeline will be shorter if your monthly contributions are higher. This means that investing a small amount will take more time to reach a Rs 1 crore corpus.
Depending on various monthly investments in an equity mutual fund, here's how much time you need to be a 'crorepati', assuming that it offers an annual return of 12%.
Monthly Investment of Rs 5,000 in SIP
- Time needed: 26 years
- Expected rate of return: 12%
- Invested amount: Rs 15,60,000
- Estimated returns: Rs 91,95,560
- Total value: Rs 1,07,55,560
Monthly Investment of Rs 10,000 in SIP
- Time needed: 21 years
- Expected rate of return: 12%
- Invested amount: Rs 25,20,000
- Estimated returns: Rs 88,66,742
- Total value: Rs 1,13,86,742
Monthly Investment of Rs 15,000 in SIP
- Time needed: 17 years
- Expected rate of return: 12%
- Invested amount: Rs 30,60,000
- Estimated returns: Rs 69,58,812
- Total value: Rs 1,00,18,812
Monthly Investment of Rs 20,000 in SIP
- Time needed: 15 years
- Expected rate of return: 12%
- Invested amount: Rs 36,00,000
- Estimated returns: Rs 64,91,520
- Total value: Rs 1,00,91,520
Investors must try to avoid lifestyle inflation. As income grows with time, they should resist the urge to proportionally increase expenses. They can rather channel salary hikes into higher SIP contributions, which will allow them to reach their target in less time.
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