Turning an initial Rs 1 lakh into a Rs 1 crore corpus may seem like a daunting financial goal, but regular investing and the power of compounding can make the target achievable over the long term. The time taken depends largely on how much an investor puts in regularly and how long the money remains invested.
Starting with Rs 1 lakh is only the first step. The journey towards Rs 1 crore can be accelerated by continuing to invest through monthly SIPs or by making regular investments over several years.
The longer the investment remains in the market, the greater the opportunity for compounding to work.
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For example, an investor who starts with Rs 1 lakh and continues investing monthly can potentially build a corpus of around Rs 1 crore in just 6 years. Assuming an average annual return of 12%, here is the illustration:
Investing Rs 1 Lakh Every Month
By investing Rs 1 lakh every month, the corpus can potentially cross Rs 1 crore in about 6 years, assuming a 12% annual return.
Monthly investment: Rs 1 lakh
Tenure: 6 years
Expected rate of return: 12%
Total investment: Rs 72 lakh
Estimated returns: Rs 32.70 lakh
Maturity corpus: Rs 1.04 crore
Investing Only Rs 1 Lakh As A Lumpsum
The picture changes considerably when there are no further investments. If an investor puts Rs 1 lakh and leaves it untouched, the money would need several decades of compounding to potentially reach the Rs 1 crore mark at a 12% annual return.
Lumpsum invested: Rs 1 lakh
Tenure: 41 years
Expected rate of return: 12%
Total investment: Rs 1 lakh
Estimated returns: Rs 1.03 crore
Maturity corpus: Rs 1.01 crore
It is important to note that a 12% return is only an assumption for illustration. Mutual fund returns are market-linked and are not guaranteed. Actual returns can vary depending on the fund, asset class and market conditions.
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For someone targeting a Rs 1 crore corpus, increasing the monthly or annual investment can potentially shorten the investment journey, while a longer tenure gives compounding more time to work.
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