At some stage of our lives, most of us will have the ambition of becoming wealthy. For many individuals, reaching a fund level of one crore rupees would be a key step toward financial independence and retiring in early retirement. This large amount of money minimizes concerns about one’s future and enhances self-confidence. However, many people think that to become a millionaire, you need to invest a significant amount of capital at the beginning. This thinking is completely erroneous because it is possible to reach your dream goal, with the right plan and with a minimal amount of savings.
In the investment world, the Systematic Investment Plan (SIP) is, at present, one of the best tools available. Through mutual fund SIPs, money can be accumulated on a daily, weekly or monthly basis, starting with 500 rupees or less. Today, we will explore how an individual can accumulate the required one crore rupees by saving 450 rupees per day or 13500 rupees per month and the importance of having patience and the benefits of compound interest.
A simple calculation to become a millionaire by age 18:
If you save 450 rupees every day, your monthly investment will be 13,500 rupees. If you invest this amount consistently for 18 years through an SIP (Systematic Investment Plan) in a good mutual fund and receive an average annual return of 12 percent, the result will surprise you.
The following table shows this calculation in detail:
| Investment Details | Value |
|---|---|
| Monthly SIP Amount | ₹13,500 |
| Investment Duration | 18 Years |
| Expected Annual Return | 12% |
| Total Amount Invested | ₹29,16,000 |
| Estimated Profit | ₹74,17,429 |
| Total Maturity Value | ₹1,03,33,429 |
That is, in 18 years you are contributing approximately ₹29 lakhs yourself, but thanks to the magic of compounding, you are receiving more than ₹1 crore 3 lakhs.
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Achieve your goal even faster: Step-up SIP
If you don’t want to wait 18 years, there is another excellent option available to you. It’s called Step-up SIP. In this method, you will increase your monthly investment amount at a fixed rate every year. Let’s say you decide to increase your investment by 10 percent every year. Then it will take you even less time to reach the ₹1 crore goal.
The calculation for a 10 percent Step-up SIP is given below:
| Description | Amount / Time |
|---|---|
| Initial Monthly Investment | ₹13,500 |
| Investment Growth Rate (Annual) | 10% |
| Investment Period | 15 Years |
| Expected Annual Return | 12% |
| Total Contribution | ₹51,47,142 |
| Potential Profit (Returns) | ₹65,76,054 |
| Total Value at Maturity | ₹1,17,23,196 |
With this method, you can become the owner of ₹1 crore 17 lakhs in just 15 years. That means you will reach your goal 3 years earlier than with a regular SIP.
Saving ₹450 every day is not a very difficult task. With a little planning and a long-term perspective, this small saving can provide you with immense financial security in the future.
Note: Investments in mutual funds are subject to market risks. Please read all scheme-related documents carefully before investing. This report is for informational purposes only and is not financial advice. Always consult an experienced advisor before investing.