Do you often keep contemplating the amount needed to save in order to become a crorepati? There is no need for concern; achieving this goal is within your reach. Various strategies exist to accumulate one crore or even more over an extended period. Whether your target is accumulating a corpus of Rs 1 crore, Rs 2 crore, or more, consistent saving and leveraging the potential of equity investments are essential for long-term success.
To facilitate regular savings, initiating a systematic investment plan (SIP) is advisable, and investing in equity mutual funds can enhance your financial growth. By participating in SIPs within equity funds, you can effectively work towards saving Rs 1 crore over time.
To determine the investment required for an SIP, with an expected return of 12 percent from equities, an individual can accumulate Rs 1 crore by investing approximately Rs 5,500 monthly over a period of 25 years. Alternatively, to reach the same goal in 30 years, a monthly investment of Rs 2,900 would suffice. For those unable to save a larger sum in the early years, it is still feasible to achieve the Rs 1 crore target.
Also Read: SIP Calculator: How much Rs 5,000 monthly investment will grow in 20 years?
Conversely, if one can invest Rs 5,500 monthly but desires to reach Rs 1 crore in a shorter timeframe, this is also attainable through a straightforward approach. This method involves incrementally increasing the monthly SIP contribution by a specific percentage. One could commence with a lower initial investment and subsequently raise the SIP amount at regular intervals.
In the aforementioned scenario, starting with a monthly SIP of Rs 4,300 and increasing it by 3 percent each month would ultimately yield a corpus of approximately Rs 1 crore. As illustrated, saving Rs 1 crore by investing Rs 5,500 monthly at an assumed annual growth rate of 12 percent requires 25 years. However, to achieve the same amount in 20 years with the same monthly investment, the SIP contribution would need to increase by about 9 percent each month.
The strategy of increasing SIP contributions facilitates the creation of a larger corpus. For instance, if an individual maintains an SIP of Rs 5,000 for 20 years, with an expected annual growth rate of 12 percent, the total investment of Rs 12 lakh would grow to around Rs 50 lakh by the end of the term. In contrast, with a 10 percent monthly increase in the SIP, the total investment of Rs 34,36,500 could result in a corpus nearing Rs 1 crore at the conclusion of the investment period.
In conclusion, although the initial investment may be modest, utilizing the increasing SIP method results in a significantly higher SIP amount in subsequent years. It is important to note that when opting to increase the investment by a specific percentage, not all fund houses or schemes may permit increments in multiples of one rupee. Therefore, it is advisable to verify that the selected fund house offers a Step-Up SIP scheme.
Additionally, it is prudent to consider a smaller increment, as the monthly SIP could accumulate to a substantial sum over time. Utilizing SIP calculators that feature an option for increasing the SIP amount can provide valuable insights into the projected SIP amounts in the future. Furthermore, as individuals age and progress in their careers, their capacity to save may also rise. The increasing SIP method is particularly beneficial in mitigating the effects of inflation on savings.
