Mutual Fund SIP: Why is making the first crore the hardest thing to do?

Imagine you have a set goal in mind to build a ₹10 crore corpus for your retirement. Now at the first thought, the biggest challenge may seem obvious—you might think you are not earning enough money or finding the perfect investment strategy

But no, neither of these are the hard part if you have financial discipline. The real challenge begins early: building the first ₹1 crore. It takes the longest and can be most frustrating, but remember, you are not just investing money here - rather creating a strong foundation for the next phase of wealth creation

Why building the first ₹1 crore is the hardest part?

because compounding works slowly in the beginning. At first, your wealth grows mainly through the money you save and invest. And the returns isn't much yet. It takes immense patience and discipline to see your investments grow slowly. Reaching the first ₹1 crore may take 15 years or more, but once that foundation is built, power of compound makes the rest of the journey easier.

How does the power of compunding work?

The power of compounding is when an investment earns returns not only on the original principal but also on the returns already accumulated over time. Now, since the principal amount keeps growing every year, so does your return.

With the power of compounding, one can create significant wealth even with small amount of investments.

For example, if you invest ₹100 and earn ₹5 as compound interest, your total becomes ₹105. In the next compounding cycle, the return is calculated on ₹105 instead of ₹100. Now, if you keep investing the same amount at same interest rate, then in the second month, you will have ₹100+ ₹100+ ₹5= ₹205, in the third month it will be ₹315.25, in fourth month, it reaches ₹431.01 and by the end of the year your ₹12,000 will grow to become ₹1591.71.

How long does it take to build the first ₹1 crore and then the rest?

If you invest ₹25,000 every month through a Systematic Investment Plan (SIP) in equity mutual funds and earn an expected return of 12% annually, it can take nearly 14 years to build your first ₹1 crore. But the second crore comes in just about 5 years. The third crore will take 3 years. And that way, the next ₹7 crore can be built in next 9 year.

So imagine, while it may take nearly 14 years to build your first ₹1 crore, the next ₹9 crore can come in just the following 17-18 years

What is the key to building the first ₹1 crore fast?

• The key to building your first Rs1 crore is patience and consistency. Time in the market matters more than timing the market, and even small but regular SIPs can grow into significant wealth over time.
• Identify the right products for you instead of quick hack and chasing returns
• Also you can try using the step-up method to increase your SIP as your income grows. You can start with a modest ₹25,000 per month, and then increase it by 10% every year. This step-up SIP approach helps you build wealth much faster and reach your financial goals sooner.