It’s tempting to have a bank balance of Rs 1 crore. Everyone wishes to be a crorepati someday. This is because to enjoy a comfortable and stress-free life, one must have a good bank balance to cater to their and their family’s needs. But, is it easy to become a crorepati? The road to becoming a crorepati indeed requires a lot of patience and perseverance. Here’s how you can become crorepati by investment.
Over the past decade, mutual funds have gained immense popularity among retail investors. You can invest in mutual funds either via a systematic investment plan (SIP) or lumpsum mode of investment. Though the SIP way of investing is widely used by investors, accumulating a sum of Rs 1 crore might seem overwhelming and unachievable. However, it is attainable with efficient financial planning and execution. Before we delve into how to achieve this corpus, let’s quickly recall what SIP is.
What is SIP?
SIP is a financial tool that allows individuals to invest in mutual funds in an effortless manner. A predetermined sum of money is invested in mutual funds at regular intervals for a specified period of time. Thus, SIP investments inculcate investment discipline through automatic investing. SIPs are quite flexible in terms of altering the investment amount, investment tenure, and periodicity, as and when needed. An investor can invest as little as Rs 100 in mutual funds via the SIP mode of investment.
How much should I invest in mutual funds via SIP to create a corpus of Rs 1 crore?
To deduce the SIP investment amount needed to attain a particular corpus, one can use an SIP calculator. Note that, an SIP return calculator can also be used to understand the future value of their investments. Let’s assume a particular scheme offers 12% average returns p.a. Now, the higher the SIP investment amount you can afford to invest each month, the earlier you’d be able to achieve a sum of Rs 1 crore.
Let’s take two scenarios. In scenario 1, you invest Rs 10,000 in a mutual fund scheme with average returns of 12% p.a. It’d take you around 20 years to attain the said amount. However, if you invest Rs 20,000 in the same mutual funds, you’d need around 15 years to accumulate a figure of Rs 1 crore.
The easiest way of achieving a bank balance of Rs 1 crore with SIP mutual funds is by following the 15*15*15 rule. According to this rule, if you invest Rs 15,000 per month in a scheme with an average returns of 15% p.a. for a period of 15 years, then you are likely to accumulate Rs 1 crore at the end of the tenure. Over here, you’d be investing a total sum of Rs 27 lacs, and thanks to the power of compounding and high returns of 15%, you’d earn around Rs 74.5 lac by the end of the investment tenure. Additionally, setting aside a sum of Rs 15,000 is quite easy and 15 years for achieving such a huge amount is quite reasonable.
Achieving a sum of Rs 1 crore is not that difficult. You need to start investing as soon as possible to attain the maximum benefits of the power of compounding. So, what are you waiting for? Become a crorepati tomorrow by investing in mutual funds via SIP today. Happy investing!