How to select your investments to accumulate Rs 1 crore quickly
The first question is where you should invest to build a corpus of Rs 1 crore. Experts suggest that systematic investment plans (SIPs) in mutual funds are an excellent way to build substantial wealth over time. Equity mutual funds emerge as a preferred choice for long-term wealth generation. Regular, even small, investments in equity funds can lead to significant corpus creation over time. This is primarily attributed to the compounding effect and rupee-cost averaging. While equity investments are associated with higher risk compared to debt or hybrid funds, they have historically outpaced inflation, making them ideal for long-term goals. For instance NIFTY 50 Total Return Index, which is a good barometer of equity market returns, has delivered annual returns of 13.5% in last 10 years, 13.4% in last 15 years, 16.2% in last 20 years and 13.8% in last 25 years ending on 21 August 2024. Discipline is paramount to maximise returns on mutual fund investments.
How much to invest from a monthly salary of Rs 1 lakh to become a crorepati
The next logical question is the investment amount required to achieve the Rs 1 crore milestone. The ideal investment amount depends on various factors such as the investment horizon and expected returns. Let us explain how much you need to invest to get Rs 1 crore from a mutual fund.
While a lakh a month might seem modest, it is crucial to set aside a portion every month to build substantial wealth. Allocating 15-20% of monthly income towards investments can help you to achieve Rs 1 crore milestone in a decent period. Keep in mind that the higher the monthly contributions, the shorter the timeline will be. If you contribute a small amount every month, it will take you more time to achieve your crorepati dream.
Assume you invest 15% of your salary — Rs 15,000 every month in an equity mutual fund that offers an annual return of 12%. Considering you get a consistent return, you will get Rs 1 crore in 211 months.
When you invest 20% of your salary — Rs 20,000 every month in an equity mutual fund and get a 12% yearly return, you can accumulate Rs 1 crore in 185 months. If you invest Rs 25,000, 25% of your salary, in a mutual fund that earns a 12% yearly return, you will get Rs 1.01 crore in 166 months.
How much should you invest to save Rs 1 crore with Rs 1 lakh salary per month: Check calculation here
| SIP mutual fund at 12% return every year | ||
| SIP amount every month | Annual increase | Number of months it will take to save Rs 1 crore |
| Rs 10,000 | No increase | 249 |
| Rs 10,000 | 5% | 220 |
| Rs 10,000 | 10% | 194 |
| Rs 15,000 | No increase | 211 |
| Rs 15,000 | 5% | 186 |
| Rs 15,000 | 10% | 166 |
| Rs 20,000 | No increase | 185 |
| Rs 20,000 | 5% | 164 |
| Rs 20,000 | 10% | 147 |
Use step-up SIP to accelerate build a lumpsum corpus quickly
To speed up the journey to a crore, consider a step-up SIP. As income grows, so should your investments. This strategy involves gradually increasing your SIP amount annually.
The dual benefits of a step-up SIP are clear: it acts as a hedge against inflation while capitalising on rising income. By aligning investments with income growth, individuals can accelerate their wealth creation timeline.
How will step-up SIP work? So, imagine you start a SIP with Rs 15,000 per month with a 12% annual return. Now you increase it by 5% every year, you can accumulate Rs 1 crore in 186 months.
If you can afford to increase the monthly SIP investment by 10% every year, you can get Rs 1 crore in 166 months.
Similarly, let’s assume you start with an initial monthly SIP of Rs 20,000 per month. You get a 12% annual return from your mutual fund. Now if you increase the SIP amount by 5% every year, you can build a corpus of Rs 1 crore in 164 months.
The increase will depend on how much you can afford to invest every month. However, as you can see, it will help you to achieve your goal quicker. Even if you cannot invest a hefty amount at the beginning, with a regular increase you can easily save a lump sum amount quickly.
Want to accumulate Rs 1 crore? Follow this investment approach
To accumulate a significant amount like Rs 1 crore, patience and discipline are essential. Achieving this goal requires regular investments over a reasonable period. It’s important to avoid withdrawing from your SIPs hastily, especially during market downturns. Historically, equity mutual funds have delivered decent returns when held for at least 7-10 years. For instance, equity large cap fund category has delivered an annual return of 13.22% in last 10 years as per latest data by Value Research. There are many other categories of equity mutual funds which have given even a higher returns. This long-term investment horizon is why SIPs are particularly well-suited for building wealth over a period of time.