Becoming a millionaire in his life is one of the most popular dreams of a middle-class person. Though, for a common man creating a wealth of 10 million or 1 crore rupees can be difficult but not impossible. Apart from gambling or winning a lottery or a jackpot, if you do not conduct any illegal activity it would be not easy for you to create the wealth of Rs crore in your lifetime.
But now it is possible with the systematic investment in such a scheme that can make your dream come true. Mutual funds are one the well-known investment corner that provides the opportunity to earn good returns on your investments with the growth of the economy. Here we are going talk about how to make crore from mutual funds with different expected returns and time horizons.
What is Mutual Fund Investment?
These are types of investment schemes offered by mutual fund houses and assets management companies (AMCs). The funds are invested mainly in equities and other debt-based securities to give investors an opportunity to invest in the stock market and other investable securities through market experts.
You can invest in mutual funds through open-ended funds or closed-ended funds, as per the schemes offered. The open-ended funds are always open to invest while the closed-ended funds are open for a limited period. In mutual funds, you can invest with a lump sum amount or through a systematic investment plan (SIP) depending on your fund’s availability or capability to pay for such investments.
What is SIP in Mutual Fund?
SIP or systematic investment plan is like a type of recurring deposits or investing option in which you can invest in a mutual fund scheme on regular intervals like monthly, quarterly or yearly as per your ease. It is suitable for investors who don’t have a corpus of huge funds to invest lump sum; instead, they can invest some portion of money from their regular income like salary or other means of earnings.
How to Make Crore from Mutual Fund?
Investing in mutual funds through an SIP with a certain specific amount for a specific period can help you to create a wealth of Rs 1 crore. Here you need to choose the right SIP, with a suitable amount to invest regularly and wait for a number of years to achieve this financial goal.
However, it is not sure you will achieve this wealth within the stipulated time as the returns on such investments are entirely based on the performance of the stock market. But based on the historical performance of equities or stock market if you assume an average rate of returns between 9% to 12%, you can achieve this goal in 5 years, 10 years, 15 years or 20 years.
Recommended Read: Documents required to Invest in Mutual Funds
How Much to Invest in SIP to Get 1 Crore?
To get Rs 1 crore through investing in the SIP of mutual funds you need to choose a specific time horizon with a possible expected rate of returns, because based on that you have to invest a specific amount of money into SIP. As long as the time horizon is long, you need to invest less amount and the shorter the time duration the SIP instalment would be high that would be not affordable for everyone.
Hence, there could be multiple scenarios where you can choose to make Rs 1 crore but make sure you are financially stable and capable of investing in such SIPs to keep investing and assure your rate of best returns. So, let’s find out how much you need to invest or how long it could take to get one crore rupees.
How to Make 1 Crore in 5 Years in Mutual Funds?
This is quite challenging to achieve but suitable for people who can pay a very higher amount of money every month and want to make one crore in the next five years. In this case, suppose you expect a 12% rate of returns from your investments, then you have to pay somewhere around Rs 1,21,300 per month into SIP to get Rs 1 crore in 5 years.
However, if you are conservative about the rate of returns and expect only 9% returns then you need to put around Rs 1,31,600 per month in SIP to get Rs 1 crore in the five years. And these returns are not adjusted with the inflation, if you consider the inflation of 6% every year, then you have to pay Rs 1,65,000 and Rs 1,77,786 respectively to get Rs 1 crore with the inflation-adjusted amount on your investment.
How Much to Invest in SIP to Get 1 Crore in 10 Years?
In this case, your time horizon becomes double to get Rs 1 crore, but here your monthly instalment will become around one-third, as your investments work with compounding of the returns on your investments that you get over the years. Here if you consider 12% returns, then you need to pay regularly around Rs 43,045 per month into SIP to get around Rs 1 crore in the next 10 years.
On the other hand, if you expect only a 9% rate of returns on your mutual fund’s investments, then you need to pay around Rs 51,300 per month to get the same amount of money in 10 years. Here you need to sacrifice your investment returns against inflation. But if you want to get Rs 1 crore adjusted with 6% inflation, then your instalment would be Rs 79,935 for 12% returns and Rs 93,719 for 9% expected returns.
How Much to Invest in SIP to Get 1 Crore in 20 Years?
This period is suitable for people who are in the age group of 30 to 40 years, as they can easily accumulate Rs 1 crore at the time of their retirement. And the best part is, with such a long time horizon your monthly SIP instalment would be low and affordable for most of the people.
Here you have more than enough time to create wealth of Rs 1 crore from the mutual fund investments. As per the calculations if you expect 12% returns on your investments in the next 20 years, then you need to invest around Rs 10,009 per month in the SIP to get Rs 1 crore. However, with 9% expected returns you have put somewhere around Rs 14,861 every month in SIP to get the same amount of money.
Here you need to keep in mind, that owing to the long duration of investment, the impact of inflation would be also very high. Hence, if you want to get inflation-adjusted returns on your investment then you need to increase your monthly SIP instalments to Rs 34,865 with 12% returns and Rs 49,842 for 9% returns to get the Rs 1 crore in the next 20 years.
How to Make 1 Crore in 15 Years by SIP?
This could be one of the most ideal times that any age group of people can choose to become a millionaire in 15 years. However, if you expect 12% returns, then you need to pay around Rs 19,819 per month and if you consider 9% returns, then your monthly SIP instalment will be around Rs 26,230 without adjusting the inflation to get Rs 1 crore in the 15 years.
However, if you consider 6% annual inflation to get the actual amount of Rs 1 crore during the same period then with 12% returns your monthly instalment will become Rs 34,500 per month, while with 9% returns your monthly instalment would be somewhere around Rs 44,000.
SIP Investment Planning for Rs 1 Crore: Table
| Time Horizons | Expected Returns 9% p.a. (Without Inflation Adjusted) | Expected Returns 12% p.a. (Without Inflation Adjusted) | Expected Returns 9% p.a. (Adjusted with 6% Inflation) | Expected Returns 12% p.a. (Adjusted with 6% Inflation) |
| 1 Crore in 5 Years | Rs 1,31,600 | Rs 121,300 | Rs 1,77,786 | Rs 1,65,000 |
| 1 Crore in 10 Years | Rs 51,300 | Rs 43,045 | Rs 93,719 | Rs 79,935 |
| 1 Crore in 15 Years | Rs 26,230 | Rs 19,819 | Rs 64,897 | Rs 50,355 |
| 1 Crore in 20 Years | Rs 14,861 | Rs 10,009 | Rs 49,842 | Rs 34,865 |
Summing-up
Creating a wealth of Rs 1 crore by investing in mutual funds is very much possible if you choose a right time horizon like 15 or 20 years. As the returns are based on the stock market performance and if there are any financial or economic crises during your investments, then your returns will be badly affected due to volatility in the market, especially if you expect the returns in the short period.
However, based on the historical performance of mutual fund schemes you can choose the best one that can give you the highest returns in minimum duration. Here you also need to consider your financial capability to continue to pay for such long years and tax liability after maturity of your investments. So, please choose wisely the right SIP with the right duration to build Rs 1 crore wealth for your family.
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