- Consistent Rs 10,000 monthly SIPs can build Rs 1 crore in 20 years at 12% returns
- The first Rs 25 lakh is the hardest and takes about 10.5 years to accumulate
- The next Rs 75 lakh takes the same time but grows faster due to compounding
For most Indians, Rs 1 crore goal is often seen as a major financial milestone, but reaching it is not an easy task. The journey takes patience, discipline, and long-term commitment.
The good news is that with time, even small investments can grow significantly. Over 20 years, a systematic investment plan (SIP) of just Rs 10,000 per month can help build substantial wealth of Rs 1 crore. This happens due to the power of compounding.
However, many investors miss one key factor, consistency. People often underestimate the power of compounding, which works best when investments are uninterrupted. The longer the money is left, the better the power of compounding works.
In a Rs 1 crore journey, the first Rs 25 lakh is usually the hardest to build. It requires the most effort and patience in the early years. Investors may not see immediate results of the compounding impact, but the goal is to remain committed.
ALSO READ: Shankar Sharma's Hot Take: SIPs Are A Great Product, Just Not For Retail Investors
A quick calculator shows that in the Rs 1 crore target, the remaining Rs 75 lakh can be accumulated more easily. It needs the same time frame and with the same investment approach that was needed to reach the initial Rs 25 lakh goal.
Here's How:
To reach Rs 25 lakh:
- SIP amount: Rs 10,000
- Investment duration: 10.5 year
- Expected rate of return: 12%
- Invested amount: Rs 12,60,000
- Estimated returns: Rs 12,68,461
- Total value: Rs 25,28,461
To Reach Rs 1 crore:
- SIP amount: Rs 10,000
- Investment duration: 20 year
- Expected rate of return: 12%
- Invested amount: Rs 24,00,000
- Estimated returns: Rs 75,91,479
- Total value: Rs 1 crore.
This shows that while reaching Rs 25 lakh can take a decade, reaching Rs 1 crore just takes another decade. That is how the magic of compounding works.
What is more interesting in this calculation is that if one continued Rs 10,000 SIP, it needed Rs 12.6 lakh to reach Rs 25 lakh. Due to compounding impact, reaching Rs 1 crore in the next 10 years also required around Rs 12 lakh.
ALSO READ: Rs 10 Crore Through SIP: How Long It Takes If You Invest Rs 10,000, Rs 25,000 Or Rs 50,000 A Month
This clearly shows how wealth grows faster in later years if one remains committed to the journey and market conditions are favourable.
Disclaimer: This article is only for informational purpose. Please consult registered financial advisors before taking investment decisions.
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