SIP (Systematic Investment Plan) is an excellent choice for investing in mutual funds. With SIP, you commit to investing a specific amount over a designated period. Additionally, you have the flexibility to increase your investment at any time. Currently, you can initiate this plan with an investment as low as Rs 250.
There is no upper limit on the amount you can invest through SIP, making it feasible to accumulate Rs 1 crore through mutual funds. One of the key advantages of SIP is the power of compounding, which becomes more effective with long-term investments. The larger your investment, the quicker you can reach a fund of Rs 1 crore.
Monthly Rs 2,000 investment
For instance, if you invest Rs 2,000 monthly in a mutual fund SIP, with an estimated return of 12 percent, you could accumulate Rs 1 crore in approximately 35 years. Over this period, your total investment would amount to around Rs 8,40,000, yielding a return of Rs 1,01,81,662. If the expected return rises to 14 percent, the time required to reach Rs 1 crore would decrease to 32 years.
Monthly Investment Rs 5,000
For an investment of Rs 5,000 in a mutual fund SIP, with an estimated return of 12 percent, you would achieve a fund of Rs 1 crore after 30 years, having contributed Rs 18 lakh. At the end of this period, your total would be Rs 1,54,04,866. If the estimated return is 14 percent, the investment duration would shorten to 25 years.
Monthly Rs 10K investment
If you invest Rs 10,000 monthly in a mutual fund SIP, you would need to invest for 25 years to reach Rs 1 crore, assuming a 12 percent return. Your total investment over this time would be Rs 30 lakh, resulting in a return of Rs 1,70,02,066. Should the estimated return be 14 percent, the investment period would be reduced to 20 years. Thus, investing in mutual funds can lead to significant wealth accumulation.
