In India, fixed deposits and public provident funds were previously considered the safest options for retirement planning. Over time, investor perceptions have changed, and people are now moving toward more flexible and yield-producing options. Mutual funds have grown rapidly in popularity because they offer the convenience of starting with a small amount, achieving good returns over the long term, and facilitating disciplined investing through SIPs.

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Why SIPs are becoming investors’ first choice?

SIPs allow investors to achieve big goals by starting with a small amount. The earlier you start investing, the faster the power of compounding grows your wealth. The combination of consistent investment and time strengthens your future fund.

How much investment is required to build a fund of ₹1 crore in 15 years?

If the goal is to build a corpus of ₹1 crore in 15 years, the SIP amount depends on the return rate. At an annual return of approximately 9 per cent, a monthly investment of approximately ₹26,426 is required. At a 10 per cent return, this amount becomes approximately ₹24,127. At an 11 per cent return, a monthly SIP of ₹21,993 is sufficient. At a 12 per cent annual return, a monthly SIP of approximately ₹20,016 can achieve the ₹1 crore target. Clearly, as returns increase, the investment requirement decreases.

More Investment Required to Become a Millionaire in a Short Time

If someone wants to make ₹1 crore in just 5 years, the investment burden increases significantly. At a 7 per cent return rate, approximately ₹1.39 lakh will be required every month. Even at a 12 per cent return, a monthly investment of approximately ₹1.14 lakh will be required. This shows that achieving a large goal in a short time is not only challenging but also financially burdensome.

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How the Power of Compounding Changes the Game

Compounding is considered an investor’s greatest weapon. In this, your investment not only earns returns, but those returns generate further returns. This is why long-term SIPs can create a substantial corpus. The famous 15x15x15 rule states that if a person makes a monthly SIP of Rs 15,000 and earns a 15 per cent annual return, they can accumulate a corpus of approximately Rs 1 crore in 15 years. Surprisingly, this same amount can reach approximately Rs 10 crore in the next 15 years without being touched.