Mumbai: The dream of achieving Rs 1 crore of substantial wealth shouldn’t be limited to a certain category of high-income individuals. Today, investment products like mutual funds can help fulfill that dream. Investing in Systematic Investment Plans (SIPs) can be an excellent option, especially for salaried individuals.
How do SIPs work?
With an SIP, you can spend a set amount of money every month in a planned and consistent way. Most people choose to invest in equity schemes through SIPs. Even if you only spend a small amount of money every month, it can grow significantly over time.
SIPs are designed to help you buy fewer mutual fund units when the market is high and more when it is low. In this way, SIP enables you to average out the cost of your investment and optimise your returns.
How can you become a crorepati?
As an investor, you can consider investing in top-performing equity mutual funds that have provided an average return of 12 per cent or more in the past year. However, it’s crucial to remember that equity mutual funds involve a higher level of risk. Investors must assess their risk tolerance before making any investments, as equity mutual fund high returns often come with high risk.
For illustration purposes, let’s consider the assumed compounded annual growth rate (CAGR) of 12 per cent, which an investor can get while investing in equity mutual funds.
The table below shows the investor’s monthly salary as Rs 30,000. In three scenarios assumed, investors can save 25 per cent, 20 per cent, and 15 per cent of their monthly salary to invest in equity mutual funds.
Salary per month (Rs)
Savings
Amount (Rs)
CAGR
Future Value
Years required to reach Rs 1 Crore
30,000
25%
7500
12%
10000000
22
30,000
20%
6000
12%
10000000
24
30,000
15%
4500
12%
10000000
26
According to the above table, an investor investing Rs 7,500 (i.e., 25 per cent) out of their monthly salary will take 22 years to reach a target corpus of Rs 1 crore. Similarly, a monthly saving of Rs 6,000 (20 per cent) and Rs 4,500 (15 per cent) will take 24 years and 26 years, respectively, depending on whether they maintain long-term discipline to build a Rs 1 crore corpus.
Conclusion
After determining why, how much, and when you want to invest, you need to create a detailed financial plan. You can divide your income into savings, investments, and spending to plan for your dream corpus of Rs 1 crore and any amount per your financial goal. Lastly, make sure your targeted corpus investment amounts stay within reason.
(Disclaimer: This article is only meant to provide information. News9live.com does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.)
How to become a crorepati — this dream is not limited to high-income people. A person earning Rs 30,000 per month can also become a crorepati by investing in a mutual funds. Business Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
