SIP Reality Check: Nowadays, everyone wants to invest in a place that offers maximum returns with a low investment. If you’re considering investing in a way that offers maximum returns with a low amount, SIPs are extremely popular these days. But the question arises: can you become a millionaire with a ₹1,000 SIP every month?
You can definitely become a millionaire, but it’s not possible. You can accumulate crores over the long term with a ₹1,000 SIP. For your information, the amount deposited may shrink to lakhs. In this article, let’s explore how you can become a millionaire with a ₹1,000 SIP. Let’s explore the truth behind these figures.
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Investing will be required for 40 years
If you make a monthly SIP of Rs 1,000 and earn an annual return of 12%, you will become the owner of approximately Rs 30 lakh after 30 years. If you make a SIP of Rs 1,000 for 40 years, this amount will grow to Rs 9.8 lakh to Rs 1 crore. However, if the returns are lower, the total amount can also be less. In fact, if you invest continuously for 30 to 40 years and earn a 12% return every year, it becomes difficult.
Inflation has this effect
If you invest regularly for 40 years and accumulate Rs 1 crore, will you notice the impact of inflation on your investment? If the average inflation rate is 6% per year, then after 30 years, the value of Rs 1 crore will be equivalent to approximately Rs 17.41 lakh. This means that you could earn Rs 1 crore.
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In the year 2055, this item will be available for Rs 6 to 7 crore. After 40 years, the value of Rs 1 crore will reduce to Rs 9.7 lakh. The item that you buy today for Rs 1 crore will become worth Rs 10 crore after 40 years. After 50 years, the value of Rs 1 crore will be only Rs 5.43 lakh. From this calculation, you can understand that with a SIP of Rs 1000, you can accumulate crores but cannot become rich.