Rs 15,000 Monthly SIP vs Rs 3 Lakh Lump Sum: Which Reaches Rs 1 Crore Faster?
Both lump-sum and monthly investments are effective strategies for wealth creation with their own unique advantages.
Becoming a crorepati is a dream for many Indians as it represents financial stability. Reaching the first crore is an important milestone and is often viewed as a key long-term financial goal.
While it may seem distant, consistent effort and disciplined investing can make this goal attainable. With the right assets and informed decisions, one can achieve this goal either by monthly small investments or a large lump sum investment. The investment duration may differ, but both pathways come with their own merits, particularly in mutual fund investments.
One of the popular investment tools for a long-term outlook, mutual funds are professionally managed investment schemes. In this, fund houses pool money from multiple investors to invest in stocks, bonds or other securities. Historically, equity-oriented mutual funds have been known to give at least 12% annual returns.
Monthly payments in mutual funds allow investors to save without worrying about market timing and reduce risk of market volatility over the long-term. On the other hand, lump-sum investments can capture market opportunities at once, benefiting from the accelerated power of compounding.
If one were to either make monthly investments of Rs 15,000 or choose a Rs 3 lakh lump sum, here’s how they may grow:
Rs 15,000 Monthly SIP:
SIP amount: Rs 15,000
Expected rate of return: 12%
Time need: 17 years
Total invested amount: Rs 30,60,000
Estimated returns: Rs 69,58,812
Total value: Rs 1,00,18,812
As seen, a monthly investment of Rs 15,000 will take around 17 years to grow into Rs 1 crore corpus at 12% annual returns.
Rs 3 Lakh Lump Sum:
Investment amount: Rs 3,00,000
Expected rate of return: 12%
Investment duration: 31 years
Invested amount: Rs 3,00,000
Estimated returns: Rs 97,66,533
Total value: Rs 1,00,66,533
A Rs 3 lakh lump sum amount will take over 30 years to grow into Rs 1 crore. On the other hand, with a disciplined investment approach, investors can reach this target in around 17 years with around Rs 30 lakh contribution.
Monthly investments allow investors to practice a disciplined financial habit without straining their budget. They can also use lump-sum investment opportunities to supplement their regular investment journey. Investors are advised to always consult their financial goals with a certified expert to avoid mistakes and make informed decisions.
