For many investors in India, building wealth is often seen as a long and uncertain journey. But through systematic investing, you can turn modest contributions into substantial financial milestones.
In today's fast-paced world, a major query in young investors' minds is the time required for disciplined monthly investment to grow into a sizeable corpus. The answer to this lies in the power of compounding, consistency of contributions, as well as the returns generated by their chosen investment avenue.
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Rs 20,000 A Month To Rs 2 Crore Target
Wealth accumulation is a long-term process. It requires both financial discipline and smart money management. The key here is to start as early as possible and maintain a long investment horizon. A corpus of Rs 2 crore can be built with the modest monthly investment of Rs 20,000 due to the power of compounding.
However, delaying your investment journey can curtail the total tenure. It reduces the potential for reinvested earnings to generate additional returns.
Investing your hard-earned money into mutual fund Systematic Investment Plans (SIPs) helps in building a Rs 2-crore corpus in a long-term tenure. It allows you to invest a fixed amount in mutual funds at regular intervals. This means that the longer your money stays invested, the more it grows.
Here's understanding how much time it takes to reach the Rs 2 crore target through monthly investments of Rs 20,000 into a mutual fund SIP, assuming that it gets an interest rate of 12% per annum.
Monthly investment: Rs 20,000
Tenure: 21 years
Total investment: Rs 50,40,000
Expected rate of returns: 12%
Estimated returns: Rs 1,77,33,484
Maturity corpus: Rs 2,27,73,484
Also, key strategies like step-up SIPs, where you are required to gradually increase your monthly investment, can accelerate the process significantly.
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Assuming that you invest Rs 20,000 into mutual fund SIPs and increase the investment by 10% every year, here's how the overall journey would look:
Monthly investment: Rs 20,000
Step-up: 10% per annum
Tenure: 16 years
Total investment: Rs 86,27,796
Expected rate of returns: 12%
Estimated returns: Rs 1,20,12,478
Maturity corpus: Rs 2,06,40,274
Generally, investors are allowed to increase their investments under step-up SIPs by a fixed amount every year. This means that through the step-up strategy, they can go on to achieve their financial target over a shorter tenure.
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