At some point in our lives, we all dream of becoming wealthy. For many, building a fund of one crore rupees is a major milestone towards achieving financial independence and enjoying early retirement. Having this large sum of money reduces worries about the future and increases self-confidence. However, many believe that becoming a millionaire requires investing a large sum of money from the very beginning. This idea is completely wrong. With the right planning, you can reach your dream goal even by saving a very small amount of money.
In the world of investment, the Systematic Investment Plan (SIP) is currently one of the best tools. Through SIPs in mutual funds, you can save money on a daily, weekly, or monthly basis. It’s possible to start this journey with as little as 500 rupees or even less. But today, we will see how you can become a millionaire by saving just 450 rupees a day or 13,500 rupees a month. The key here is patience and the power of compounding.
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The simple calculation to become a millionaire by age 18:
You spend on average 450 Rupees every day (approx. 13,500 Rupees a month), and you have done this consistently for 18 years via an SIP investing in a strong mutual fund with a 12% average annual return. You may be amazed at the end result of your efforts.
The information regarding this calculation is included in the following table:
| Description | Amount / Time |
|---|---|
| Monthly Investment | ₹13,500 |
| Investment Period | 18 years |
| Expected Return (Annual) | 12% |
| Total Contribution | ₹29,16,000 |
| Total Value at Maturity | ₹1,03,33,429 |
That is, in 18 years, you are depositing approximately 29 lakh rupees yourself, but thanks to the magic of compounding, you are receiving back more than 1 crore 3 lakh rupees.
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Accelerate Your Accomplishment with Step-Up SIP
Do not feel that you are forced to wait the 18 years; instead, consider using the Step-Up SIP. When using this method, you add a fixed percentage (e.g., 10%) to your investment amount each year. Therefore, using a 10% Step-Up SIP will reduce the time required to accumulate 1 crore rupees.
The formula for calculating a 10% Step-Up Investment for a SIP is outlined below:
| Description | Amount / Time |
|---|---|
| Initial Monthly Investment | 13,500 rs |
| Investment Growth Rate (Annual) | 10% |
| Investment Period | 15 years |
| Expected Return (Annual) | 12% |
| Total Deposit | ₹51,47,142 |
| Potential Profit (Return) | ₹65,76,054 |
| Total Value at End of Term | ₹1,17,23,196 |
With this method, you can become the owner of 1 crore 17 lakh rupees in just 15 years. This means you will reach your goal 3 years earlier than with a regular SIP.
Saving 450 rupees 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 does not constitute financial advice. Always consult an experienced advisor before making any investment.