There are two ways you can invest in a mutual fund scheme – lump sum or SIP. Lump sum investing can be more helpful when you basically want to tap market opportunities during downtrends. SIPs on the other hand need a disciplined approach. As SIP investment balances out market timing risks, it is an ideal choice for some investors.
SIP has gained popularity among Indian mutual fund investors as it supports rupee-cost averaging and promotes disciplined investing, helping investors avoid concerns about market volatility and timing the market.
In this story, we will explore how many years it takes for an investor to accumulate a corpus of Rs 10 crore by investing Rs 5000, 10,000, and 15,000 per month, assuming an annualised return of 12% and a 10% increase in the SIP amount each year.
Also read: Rs 1 crore corpus with Rs 10000 SIP: How long it takes to reach with 10%, 12% and 14%
SIP of Rs 5000 with a 10% step-up each year
If you invest Rs 5000 every month with an average annual return rate of 12% and annual step up of 10% for 36 years, you will accumulate approximately Rs 10.2 crore.
Total investment – Rs 1.8 crore
Estimated returns – Rs 8.4 crore
Total value of investment after 36 years – Rs 10.2 crore
SIP of Rs 10,000 with a 10% step-up each year
If you invest Rs 10,000 every month with 10% step-up every year at an average annual return rate of 12% for 31 years, you will accumulate approximately Rs 10.17 crore.
Total investment – Rs 2.18 crore
Estimated returns – Rs 8 crore
Total value of investment after 31 years – Rs 10.18 crore
SIP of Rs 15,000 with a 10% step-up each year
An SIP of Rs 15,000 per month with a step-up of 10% every year will take you to Rs 9.95 crore in 28 years.
Total investment – Rs 2.42 crore
Estimated returns – Rs 7.53
Total value on investment after 28 year – Rs 9.95 crore
These calculations prove that SIP investments can help one achieve a goal of making a large corpus from mutual funds,
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