You can accumulate ₹55.88 crore by initial savings of ₹30 a day

How to become crorepati: Genius doesn't do different things; they do things differently. Similarly, a smart investor becomes a millionaire or a billionaire by investing wisely. For example, if an investor starts a monthly equity mutual fund SIP of ₹9,000 and keeps at it religiously for 35 years, he/she can accumulate ₹55.88 crore. However, like a smart investor, if someone increases their monthly SIP in sync with their annual income, they can accumulate a substantial amount by retirement.

To achieve this, one needs to start investing early in their career. To begin a ₹9,000 monthly SIP, an investor needs to save ₹30 a day ( ₹9,000/30), which can be achieved by cutting down on unnecessary expenses.

How to become rich via a mutual fund SIP?

Speaking on how a smart investor accumulates much more than a normal equity mutual fund investor, Pankaj Mathpal, CEO & MD at Optima Money Managers, said, “Equity mutual funds offer a monthly SIP with an annual step-up offer. However, few people choose this annual step-up. This leads to them accumulating almost half the amount that they could have by opting for the annual step-up.”

On how much annual SIP step-up an investor can opt for, SEBI-registered tax and investment expert Jitendra Solanki said, “In normal conditions, an investor takes a 10% annual SIP step-up. However, it is advised to opt for a 15% annual step-up SIP. This has a significant impact on one's net sum at the time of redemption because in a long-term time horizon of 35 years or more, one can expect at least 15% annual return in one's money.”

Mutual fund SIP calculator

Assuming a 15% annual return on a mutual fund SIP of ₹9,000 per month, with an annual step-up of 15%, the SBI Securities' mutual fund calculator suggests that one would accumulate ₹55.88 crore after 35 years.

Mutual fund plans you may look at

On mutual funds that one can look at for whopping returns through SIPs, Mathpal of Optima Money Managers listed out the following plans:

1] HDFC Flexi Cap Fund;

2] Nippon India Multicap Fund;

3] ICICI Prudential Value Fund;

4] Kotak Multicap Fund; and

5] Invesco India Large & Midcap Fund.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.