Mutual Fund has gained significant popularity among common people. Despite being associated with the market risks, mutual fund gained reputation fof offering good amount of interest in return. But can you get Rs 1 crore from a Rs 5000 SIP? Here’s the calculation you should know before making any investment.
In now-a-days, mutual fund SIPs are considered an effective option for long-term investment. Mutual fund SIPs involve significant stock market risk, but it’s also true that the earnings generated are also from the stock market. Furthermore, compounding in SIPs helps build a larger corpus. Therefore, the longer the SIP is run, the larger the corpus will be.
The size of the corpus you can build through SIPs depends on several key factors: first, the amount of money you’re investing in, second, the time period for which you’re investing, and third, the returns you’re receiving.
How to claims Rs 1 Crore from Rs 5,000 SIP
If you earn an average annual return of 12%, it could take you 26 to 27 years to build a corpus of ₹1 crore from a ₹5,000 SIP. Similarly, if you earn an average annual return of 15%, it could take you 23 years to build a corpus of ₹1 crore from a ₹5,000 SIP. When investing in an SIP, you need to keep some important things in mind. SIPs never provide a constant return; they fluctuate. If the market is bullish, you’ll see higher returns.
Similarly, if the market is down, you’ll incur losses. You’re also subject to capital gains tax on your SIP returns. Therefore, you’ll need to continue investing for a little longer than your target period to achieve your goal.
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