HomeInvestingPersonal FinanceHow much should you invest through SIP to get Rs 10 Crore...

How much should you invest through SIP to get Rs 10 Crore in 20 years?

The Systematic Investment Plan (SIP), a mutual fund investment mechanism, provides for periodic fixed-amount investments in a specific equities or debt-oriented scheme. Experts advise that when investing in mutual funds, especially through a systematic investment plan (SIP), one should start early, invest regularly, and stay invested for a long period of time in order to get the most out of portfolios by minimising risk in order to create wealth through the power of compounding, rupee cost averaging, low initial investment starting from ₹500 per month, and flexibility in setting up SIP amount and future goals.

Nevertheless, before investing in a mutual fund scheme, a person should be aware of his risk tolerance and designate himself as an aggressive, moderate, or cautious investor based on how much risk he is ready to take on. Hence, as an illustration, Mr A is an ambitious investor who is willing to take large risks, yet his objective is to earn ₹10 crore in 20 years with an equity-oriented mutual fund SIP; how much should he spend every month to attain this goal? Let us hear from our experts.

According to CA Manish Hingar, the amount to invest for ambitious investors seeking to develop a corpus of ₹10 crores over a period of 20 years would depend on the annualised rate of return on their investment. To acquire ₹10 crores at a 15% annualised rate of return, an investor would need to begin a monthly SIP (Systematic Investment Plan) of around ₹66,000 for 20 years.

It is crucial to remember, however, that the rate of return on investment can vary based on a variety of factors, including market circumstances, investing strategy, and the sort of investments undertaken. As a result, before making investment selections, investors should thoroughly investigate and assess various investment possibilities, as well as speak with a financial counsellor. Furthermore, investors may wish to consider raising their monthly SIP amount by 10% yearly in order to reach the goal corpus sooner. CA Manish Hingar went on to say,

You might start with a smaller sum of roughly ₹36,000 per month in the first year instead of the initial investment of ₹66,000 per month by raising your monthly SIP by 10% per year. This would still allow you to reach the ₹10-crore aim over a 20-year period, he added.

It is also a good idea to invest in a combination of midcap and smallcap mutual funds. These categories invest in firms with the potential for greater long-term growth and have historically achieved a strong CAGR of 18.52% and 20.12%, respectively, over the previous ten years. According to CA Manish Hingar, it is critical to do extensive study and comparison of different mutual funds within the category in order to discover a fund that regularly exceeds its peers and benchmark.

According to Mr. Abhishek Dev, how much to invest to reach ₹10 crore in 20 years depends on many factors, the most important of which are returns earned, which are impossible to predict in advance, though advisors make assumptions based on past performance of asset classes and their expected behavior/returns. In simply numerical terms, if you invest say ₹1.5 crore and compound it at 10% per year, you should be able to achieve ₹10 crore in 20 years.

Similarly, if you invest roughly ₹1.3 lakh per month for 20 years and it increases at 10% per year, you may accumulate ₹10 crore. Many combinations are therefore conceivable based on the desired amount, projected returns, and form of investing. Nevertheless, there is no assurance that the projected return will be realised, thus continuous portfolio monitoring in line with market and asset class performance would be necessary, according to Abhishek Dev.

Disclaimer: The views and recommendations made above are those of individual analysts or personal finance companies, and not of Business Headline. We advise investors to check with certified experts before taking any investment decisions.

Aryan Jakhar
Aryan Jakhar
Aryan Jakhar is an Indian Journalist with over two years of active working experience. Aryan is currently working as editor-in-chief at BusinessHeadline.in and he is reachable on contact@businessheadline.in
- Advertisment -

Most Popular