SIP Calculator: How To Build A Rs 1 Crore Corpus In 10 And 20 Years

Generating a Rs 1-crore corpus may still sound like a distant dream for many of us, but doesn’t require luck, mind-boggling jackpots or big bets to become a reality in, say, 10 or 20 years. Regular, small investments done consistently over a period of time with patience and a sound financial plan can get you there. 

A systematic investment plan (SIP) lets you invest a fixed amount regularly so that your money can take advantage of compounding and grow over time. The right SIP amount coupled with a long-term financial goal like accumulating Rs 1 crore becomes highly achievable.

What Is SIP?

SIP is a method to invest in mutual funds. With SIPs, investors can invest a fixed amount (usually every month) into a mutual fund scheme of their choice. SIP helps investors take advantage of rupee cost averaging and stay away from the stress of market timing.

Benefits Of Investing Through SIP

SIP makes achieving financial goals easier. Investing with a financial goal in mind such as purchasing a house, your child’s education or building a retirement corpus makes sense when you go through SIP. You steadily build your wealth without having to follow the markets too closely.

How Can You Create A Rs 1 Crore Corpus Through SIPs in 10-20 years?

SIPs allow investors to build a sizeable corpus over the long-term. Depending on the financial goal that you wish to achieve, the corpus that you want to accumulate will depend on three variables – the amount of money you invest, the number of years you stay invested for, and the returns your investments generate. Remember, the longer you stay invested, the more rewards you can earn.

How To Grow Rs 1 Crore in 10 Or 20 Years

Suppose you invest Rs 10,500 every month in mutual funds through SIPs and your mutual funds give you returns of 12 per cent per annum. In 20 years, your Rs 1 crore goal will be reached.

1. SIP amount (monthly) = Rs 10,500
2. Period = 20 Years
3. Returns = 12 per cent per annum
4. Total investment = Rs 25.2 lakh
5. Future value of your investment = Rs 1.04 crore

This means if you invest Rs 10,500 per month for 20 years, you will receive Rs 1.04 crore. This corpus includes your earnings of Rs 25.2 lakh and the returns of Rs 78.8 lakh that your investments earned.

Similarly, if you want to create a corpus of Rs 1 crore in 10 years, you need to invest Rs 45,000 every month in an SIP, assuming your investments generate returns of 12 per cent annually.

Know How Compounding Works

When you make investments through SIPs, your earnings are reinvested and thus earn more returns. This is how most of your corpus is generated when investing through SIPs. So even if you wish to create a retirement corpus of Rs 1 crore or more, understand how compounding works.

Why Should You Expect 12 Per Cent Returns?

We assume a 12 per cent return over your investments as historical data suggest that most equity mutual funds generate returns in the range of 10 to 15 per cent annually over the long-term. By carefully picking equity mutual funds with a good mix of stocks in large cap, mid cap and diversified equity funds, you give yourself a higher chance of generating returns that are close to 12 per cent.

Interest compounds over long periods of time. Thus, by starting your investments early and staying invested through your equity mutual funds, you may be able to accumulate that desired wealth of Rs 1 crore.

(Disclaimer: This information is for educational purposes only and does not guarantee any returns. Please consult your financial planner before making any investment)