One of the most seamless ways to achieve long-term financial goals is by investing money in mutual funds through systematic investment plans (SIPs).
It really helps when your goals are clearly defined and have a specific timeline. For instance, when you know that you would need ₹1 crore in the next 10 years, i.e., around the same time in 2035, then how much monthly commitment to mutual funds via SIP you would need.
With the help of the SIP calculator, we have ascertained the amount of EMIs. Notably, your monthly contribution would vary based on the rate of return delivered by the investment.
Accumulate ₹1 crore
When the annual return is 12%, the EMI required to accumulate ₹1 crore would be ₹43,471. This way, you will end up investing ₹52.17 lakh to save ₹1 crore, which is almost double your investment.
However, if the annual rate of return is slightly lower – say 11% — then you would need a higher EMI of ₹46,083 (see table below) to be able to accumulate ₹1 crore.
Now, if your investment delivers a lower annualised return of 8%, you will need ₹54,661 a month to save ₹1 crore to meet your financial goals, which could be to buy a house or to send your child for higher education.
At the same time, if the mutual funds you invested in grew at the rate of 9%, then you would need to invest ₹51,676 via SIPs.
Finally, the table shows that someone whose investments are growing at a rate of 10% per year needs to contribute ₹48,817 annually.
To sum up, an investor aiming to accumulate ₹1 crore before November 2035 must invest a minimum of ₹43,471 a month in SIPs of equity mutual funds or a maximum of ₹54,661 a month if the investments deliver an annual return in the range of 8% to 12%.
Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision.
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