How to accumulate ₹1 Cr in 10 years via mutual fund SIP? | Mint
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Business News/ Mutual Funds / News/  How to accumulate 1 Cr in 10 years via mutual fund SIP?
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How to accumulate ₹1 Cr in 10 years via mutual fund SIP?

Earning a sizable fortune has consistently turned out to be truly a blessing for long-term investors, thus mutual funds are subject to long-term bets.

In this scenario, equity mutual funds have a track record of providing the best long-term returns for objectives with a time horizon longer than ten years. (istockphoto)Premium
In this scenario, equity mutual funds have a track record of providing the best long-term returns for objectives with a time horizon longer than ten years. (istockphoto)

Earning a sizable fortune has consistently turned out to be truly a blessing for long-term investors, thus mutual funds are subject to long-term bets. The goal of long-term investments is to finance future goals, thus picking an appropriate investment for wealth development will help you achieve your financial objectives, such as paying for education, buying a house, retiring early, etc. In this scenario, equity mutual funds have a track record of providing the best long-term returns for objectives with a time horizon longer than ten years. Let's look at an example to illustrate how a mutual fund SIP may help an investor accumulate 1 crore over the course of ten years.

Gautam Kalia, SVP and Head Super Investor at Sharekhan by BNP Paribas

The investor should invest Rs.43,500 per month to create a corpus of Rs.1Crs in 10 years assuming return of 12% pa. As this is long term investment goal, investor may consider the below equity Mutual fund schemes.

Scheme NameCategory% of AllocationSIP Amount in Rs
ICICI Prudential Bluechip Fund - GrowthLarge Cap30%13,000
Canara Robeco Emerging Equities - GrowthLarge & Mid15%6,500
Mirae Asset Midcap Fund - Reg - GrowthMid Cap25%6,000
SBI Small Cap Fund - GrowthSmall Cap25%5,000
HDFC Flexi Cap Fund - GrowthFlexi Cap30%13,000
   43,500

S Ravi, Former Chairman of Bombay Stock Exchange (BSE)

To accumulate 1 Cr in 10 years via mutual fund SIP, you need to invest a monthly SIP amount of approximately 65,000. This amount may however vary depending on the mutual fund's historical returns, expense ratio, and market conditions.

Some tips that can help you achieve this target are:

1. Early Start: Like all investments the earlier you start, the less you need to invest. Begin your SIP as soon as possible to take advantage of the power of compounding.

2. Portfolio Diversification: Diversify your portfolio across multiple mutual fund schemes and asset classes to reduce risk.

3. Regularly review and adjust: Regularly review and adjust your investment strategy to ensure that it aligns with your financial goals and market conditions.

4. Consider increasing your SIP amount periodically: If your income increases over time, consider increasing your SIP amount to reach your goal faster.

Some popular mutual funds that have delivered consistent returns over the years include HDFC Top 100 Fund, SBI Blue-chip Fund, ICICI Prudential Blue-chip Fund, Axis Blue-chip Fund, and Mirae Asset Large Cap Fund. All investments are subject to market risks so bear in mind that past performance is not indicative of future results, and you should always consult with a financial advisor before making investment decisions.

Nirav Karkera, Head of Research, Fisdom

One can mathematically derive the amount that needs to be invested periodically to achieve a corpus of INR 1 Cr. In ten years. This computation requires assuming the expected rate of returns on equity and debt as primary asset classes. While this could be anything, a conservative starting point would be an expectation of 10% annual returns with equities and 6% annual returns on debt components.

These assumptions can be fine-tuned basis further details. If the monthly investment amount derived seems steep, one can always start with whatever amount comfortable and step-up on the amount along with incremental income. For a ten-year horizon, it is important to be equity-heavy at least for the first eight or so years and thereafter de-risk through gradual reduction of equity exposure. On the equity side, Mirae Asset Largecap Fund, Kotak Flexicap Fund, Quant Active Fund and PPFAS Flexicap Fund are funds holding strong promise. IDFC dynamic bond fund, SBI Magnum Gilt Fund and HDFC corporate bond funds are strong contenders on the debt side.

Amit Gupta, MD, SAG Infotech

You can begin with a lump sum and then layer on a SIP. It, however, assumes that you already own a corpus.

The second is taking on more risk in exchange for greater rewards. Long-term, large-cap funds are often safer, but choosing small cap funds or sector funds is too hazardous.

The third option is to extract additional money from your savings each month to raise the amount invested. This alternative appears to be the most practical and viable one.

With the help of these problem statements, you may calculate how much money you could really grow to if you invested Rs. 36,335 every month for ten years. You would have invested Rs. 43.20 lakhs as principal after 10 years, and the remaining sum would have come from the fund's profits.

Nonetheless, a monthly investment of Rs. 36,335 is not a little figure, and the majority of individuals could find it challenging to save this much money. What then is the alternative? Always keep in mind that time is on a SIP's side. The SIP becomes better and more profitable the longer you run it. So make time work if you're actually serious about building riches.

Tenure of SIPTarget CorpusYield on SIP FundMonthly SIP required
5 YearsRs.1 crore15% CAGR annuallyRs.112,889
10 YearsRs.1 crore15% CAGR annuallyRs.36,335
15 YearsRs.1 crore15% CAGR annuallyRs.14,959
20 YearsRs.1 crore15% CAGR annuallyRs.6,679
25 YearsRs.1 crore15% CAGR annuallyRs.3,083
30 YearsRs.1 crore15% CAGR annuallyRs.1,444

The table above is so obvious of itself. The amount of money you need to invest each month to attain a corpus of Rs. 1 crore decreases as your duration increases by 5 years. You only need a SIP of Rs. 1,444 per month to attain your target corpus of Rs. 1 crore, for instance, assuming you start investing at the age of 25 and give yourself 30 years to do so. Time has that much influence over your SIP results.

Unfortunately, even those with the best of intentions and the most accurate calculations can make mistakes. Here's how to make your SIP a success.

Ruchika Bhagat, MD Neeraj Bhagat & Company

Determine your investment amount: Use a mutual fund calculator to determine the amount of monthly SIP you need to invest to accumulate 1 crore in 10 years, assuming an average annual return of 12%. This comes out to be around 55,000 per month.

Choose the right mutual funds: You should choose mutual funds that have a good record of accomplishment of generating high returns over the long term. Here are some mutual funds that you can consider:

· Open-ended funds:

· Close-ended funds:

· Equity funds:

· Debt funds:

· Hybrid funds:

· Solution-oriented funds:

· Growth funds:

· Tax-saving Funds (ELSS):

You can also consider investing in a combination of large-cap, mid-cap, and small-cap funds to diversify your portfolio.

Invest regularly: Invest the determined amount regularly for the next 10 years to accumulate 1 crore. It is important to invest systematically and not miss any SIP installments to achieve your investment goal.

Review your portfolio regularly to ensure that your investments are performing as per your expectations. You can make changes to your portfolio, if required, based on changing market conditions or your investment goals.

Consider a long-term investment horizon: Mutual funds are a long-term investment option, and you should have a long-term investment horizon of at least 10 years to generate a significant corpus.

It is important to note that mutual fund investments are subject to market risks, and past performance is not a guarantee of future returns. Therefore, you should do your research and consult a financial advisor before making any investment decisions.

Vivek Goel, Joint MD, Tailwind Financial Services

Simply saying, accumulating 1 cr over a 10-year period would require about 43,000 assuming a 12% p.a. return. Now obviously it looks like a simple mathematical answer to a numerical goal. But beyond this answer is where the real goal lies. Firstly, not everyone would have excess disposable income to be able to start by saving this sum. For this what is required is planning expenses well enough to maximise savings along with understanding the concept of ‘step-up SIP’. 

Same as our incomes grow every year, one can start their SIP with a smaller amount and increase it by a fixed percentage. Taking an example if we fix this percentage at 10%, then the starting SIP required comes down to about 31,500. After understanding the first part, the second and more important one is the behavioural aspect, where one needs to understand that 12% returns would be generated through equity funds which are not linear and require patience from investors to achieve the goal.

Nehal Gupta, Director, AMU Leasing

Building wealth requires patience, discipline, and a smart investment strategy. If you want to accumulate 1 Cr in 10 years through mutual fund SIPs, start early, stay invested, and choose the right funds. Look for funds with a proven track record of delivering consistent returns over the long term. Consider diversifying your portfolio across different asset classes, such as equity, debt, and gold, to minimize risk.

Some top-performing mutual funds that you could consider investing in include Axis Bluechip Fund, SBI Focused Equity Fund, Mirae Asset Emerging Bluechip Fund, HDFC Corporate Bond Fund, and ICICI Prudential Gold Fund. Remember to invest regularly and increase your SIP amount as your income grows.

Above all, stay focused on your goal and avoid impulsive decisions based on short-term market fluctuations. With time, discipline, and the right investments, you can achieve your financial goals and build a comfortable future for yourself and your loved ones.

Mushraff Hussain, COO of Ezeepay

Large-cap funds earned an average return on investment of 13.36% over ten years. An investment in a mutual fund, also known as a systematic investment plan (SIP), is equivalent to an investment in a SIP, which invests in various assets according to a predetermined asset allocation strategy.

It is also possible to accumulate one crore in ten years by saving and investing INR 40,000-45000 per month in an aggressive portfolio. If the SIP amount is increased by 5% annually and the interest rate increases by 12%, it would yield 1 crore taking ten years and six months to implement and benefit from this method. A monthly investment of INR 30,000 will yield nearly Rs. 66 lakhs (calculations based on a 12% long-term return).

I recommend the Aditya Birla Sun Life Digital India Fund, Franklin India Technology Fund, and ICICI Prudential Technology Fund.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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ABOUT THE AUTHOR
Vipul Das
Vipul Das is a Digital Business Content Producer at Livemint. He previously worked for Goodreturns.in (OneIndia News) and has over 5 years of expertise in the finance and business sector. Stocks, mutual funds, personal finance, tax, and banking are among his specialties, and he is a professional in industry research and business reporting. He received his bachelor's degree from Dr. CV Raman University and also have completed Diploma in Journalism and Mass Communication (DJMC).
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Published: 12 Mar 2023, 06:08 PM IST
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