Mutual Fund: Investing at the right time and with the right plan can easily make you a millionaire by retirement. If you are 40 years old now and want to create a fund of ₹1 crore or more by the age of 60, then you must understand the special planning of SIP (Systematic Investment Plan). This is not just a dream but can become a reality with smart planning. By investing a fixed amount every month, you can fulfill all your financial dreams.
Dream of becoming a millionaire
If you are 40 years old and want to create a fund of ₹1 crore by the age of 60, then it is not difficult. This goal can be achieved with a little discipline, understanding, and the right investment strategy. Investing for a long period of 20 years means you can take some risk, and this can be the key to better returns.
Where to invest
Now the question is where to invest. For investors looking for safe and stable returns for a long period in the market, making SIPs in large-cap mutual funds or low-cost index funds (such as Nifty 50 or Sensex-based) can be the best option. These funds invest in big and strong companies, which give stable growth with less volatility in the market.
How much SIP will have to be done every month to create a fund of ₹ 1 crore
How much SIP will have to be done every month to create a fund of ₹ 1 crore? If you make a monthly SIP of ₹6,300 to ₹6,600 and the stock market gives an average annual return of 15%, then in the next 20 years you can create a strong fund of ₹1 crore. If we look at the historical performance of Indian equity markets, it has given a return of about 15% CAGR.
Invest every month without fail
The amount of ₹1 crore which seems very big today, will not be worth that much after 20 years. If inflation grows at the rate of 6% every year, then after 20 years the value of ₹1 lakh today will be equal to approximately ₹3.2 lakh. This means that the value of ₹1 crore will also decrease according to that time and will feel like only ₹31-32 lakh. In such a situation, it is important to plan your investments keeping in mind your future needs and expenses so that you can achieve your retirement or bigger financial goals.
Purchasing power of ₹1 crore will be less
Yes, if you want to live a secure life after retirement, then just ₹1 crore will not be enough. Considering inflation and increasing lifestyle needs, a much larger fund will be required. If the estimated return on investment falls to 12%, then to achieve the target of ₹1 crore, you will have to make an SIP of about ₹9,000 every month. On the other hand, if you want to create a fund of ₹3 crore, then the SIP will be 10%. The amount can reach around ₹25,000–₹27,000, which can be quite challenging for a normal middle-class family.
Step-up SIP is a smart method
Step-up SIP is a smart investment method for the future, in which your SIP amount is increased a little every year. For example:
- Start with ₹5,500 in the first year.
- Increase it by 10% to ₹6,050 in the second year.
- Make it ₹6,655 in the third year.
With this, your investment will increase as your income increases and a huge fund will be created in the long term.
Understand the benefits too
Step-up SIP The biggest feature of Step-up SIP is that it keeps the investment burden low in the initial years. That is, as your income increases, increase the amount of SIP accordingly. This maintains continuity in investment and it can also be easy to create a big fund.
Keep big goals
If you develop the habit of investing on time, then even by starting SIP at the age of 40, you can get big returns till the age of 60. It is easy to create a fund of Rs 1 crore in 20 years through Step-up SIP. However, always set an investment target keeping in mind the rising inflation and future needs, so that retirement or big financial goals are secured.