SIP Calculation- Invest Rs 5,000 Per Month To Build Rs 1 Crore, Know How

SIP Calculation: If you also aspire to become a millionaire by saving small amounts each month, then a Systematic Investment Plan (SIP) might be a great choice for you. Many individuals think that accumulating a corpus of Rs 1 crore necessitates a high salary or a significant lump sum investment. However, even modest amounts can lead to substantial goals over time. Compounding is key to this process. So, today we will explain how many days it would take to reach Rs 1 crore if you invest Rs 5,000 monthly and what the best investment strategy is.

When will an SIP of Rs 5000 turn into Rs 1 crore?

Based on SIP calculations, if an investor contributes Rs 5,000 every month and achieves an average annual return of 12%, it would take roughly 2.6 to 2.7 million years to accumulate a corpus of Rs 1 crore. Throughout this period, the total investment would amount to about Rs 15.60 to Rs 16.20 lakh. Nevertheless, thanks to compounding, the total corpus could surpass Rs 1 crore, indicating that the true benefit lies in the returns on those returns.

How does compounding help in building a large fund?

The growth from compounding is gradual in the early years of investment, but returns start to accumulate as time goes on. The value of investments tends to rise sharply in the last few years. This is why it’s essential to remain dedicated to SIPs for the long haul. Halting investments midway can hinder achieving larger objectives. Equity mutual funds have historically provided returns averaging between 11 to 13 percent over the long term. However, these returns can fluctuate with the market and are not guaranteed. Investors who maintain their SIPs even during market ups and downs can experience favorable outcomes in the long run.

How to invest Rs 5000?

Experts believe that instead of investing the entire amount in a single fund, it’s better to split it into two. For example, investing Rs. 3,000 in an index fund and Rs. 2,000 in a flexi-cap fund helps balance the portfolio and reduces risk. If an investor wants a combination of equity and debt, a hybrid fund can also be a good option. If an investor increases their SIP by 10% each year, the target of Rs. 1 crore can be achieved quickly.

Increasing investments as income increases makes a significant difference in the long run. Furthermore, experts advise investing in equities only if your target is at least 5 years or more. Stopping SIPs when the market is falling is considered a big mistake, and funds with high expense ratios should be avoided.