Mutual Funds: How much should you invest in monthly SIP to accumulate ₹1 crore in 10 years?

If you aim to accumulate ₹1 crore in a decade to meet your long-term financial goals, such as retirement or buying a house, what could you possibly do to make this happen? One way to do this is to put sufficient money in a fixed deposit (FD) or gold and allow it to grow over a long period of time. It’s definitely safe, but a quite long process. Ain’t it?

The other option is to invest in securities in tranches and allow the investment to reach ₹1 crore in 10 years. This is quite feasible but risky.

Alternatively, one could invest small amounts of money in mutual funds via SIPs (systematic investment plans) every month over the next 10 years so that the investment swells to ₹1 crore in the required time.

However, multiple variables come into play: how much you will invest, with what frequency, what the rate of return will be, and so on.

We did the math for you

Let us assume that you have 10 years and your portfolio grows at 12 per cent per annum. Then how much will you need to invest in a monthly SIP to accumulate ₹1 crore in a decade? Well, with the help of an SIP calculator, we have discovered that an investor would need a ₹43,150 monthly SIP to accumulate ₹1 crore in 10 years.

(Calculations arrived at with the help of SIP calculator)

Likewise, if the portfolio grows at the rate of 14 per cent a year, you would need slightly less investment via SIP — ₹38,250 to be able to accumulate ₹1 crore.

When the rate of return increases further to 16 per cent, you would need to make an even smaller investment of ₹33,750 a month to attain your goal of ₹1 crore.

Meanwhile, it is important to note that a rate of return above 10 per cent is possible only in equity mutual funds and not in debt schemes. Therefore, it is important to keep the portfolio highly skewed towards equity to accumulate ₹1 crore in 10 years.

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