Do you want to be a crorepati?
Are you ready to invest Rs. 10k per month?
If yes, then you have landed in the appropriate place.
Everyone wants to be wealthy as soon as possible. It is important to remember that it doesn’t happen instantly. Because good things take some time.
Wealth accumulation could be speeded up with the discipline of saving.
Yes, consistency in savings & also stepping up your savings rate, in the long run, will aid you in this Wealth Creation Process.
In this article, let us try to figure out how to accumulate wealth in crores with a monthly saving of just Rs 10K.
“Always invest for the long term.”
— Warren Buffett
As Warren Buffet stated, we should always focus on long-term investing. Down the lane, it will balance your financial status & help you in achieving your financial goals.
The benefit of compound interest works best in the long run. Also, in order to accumulate the required corpus, we need to invest in an investment vehicle that provides inflation-beating returns. A mutual fund Systematic Investment Plan (SIP) is the perfect option to channelize your regular monthly savings.
Mutual funds that invest in stock markets are a must-have for long-term investors. A well-managed & well-diversified equity mutual fund with a good track record has the potential to earn better returns in the long run.
Investment Strategy to Invest in a SIP:
The following table shows, how a mutual fund investment helps you in achieving the required corpus just by investing Rs. 10,000 monthly.
|SIP Annual Step-up Rate||5%|
|Total Amount invested||39.68 Lakhs|
Let us assume you are investing Rs. 10,000 per month for the next 20 years with an annual step-up rate of 5%. The total amount invested would be around Rs. 39.68 lakhs.
The below table shows the various fund categories available in Equity Mutual Funds and the average return they could potentially provide in 10 years.
|Fund Category||10-year Avg. return||Final Corpus|
|Equity: Large Cap||12.32%||1.35 crores|
|Equity: Mid Cap||16.85%||2.24 Crores|
|Equity: Small Cap||18.50%||2.71 Crores|
|Equity: Hybrid Aggressive||12.27%||1.34 Crores|
|Equal Contribution in the above 4 categories||1.91 Crores|
We have taken the average 10-year return for a particular category of funds for calculation purposes.
Let us look at what category of the fund each kind of investor could invest in along with their average returns in the long term below;
- If a person invests Rs. 10,000 in Equity Large Cap Category Mutual Funds where the average return is 12.32%.
- Then the final corpus value in 10 years would be Rs. 1.35 crores.
- Investors having a higher risk appetite can go for Mid Cap or Small Cap, where the average returns are slightly higher than the Large Cap category.
- The final corpus under Mid cap & Small cap would be Rs 2.24 crores & Rs. 2.71 crores respectively.
- Under the Equity Hybrid category, the average return is 12.27%.
- The final corpus would be around Rs.1.34 crores.
- If you want to diversify your investment portfolio, then you can split your investment under the four categories equally.
- Ex: you can invest Rs. 2500 under each category.
- In that case, the final corpus value would be Rs. 1.91 crores.
Since SIP allows you to start investing with a small amount, you can gradually build your Investment Portfolio in the long run.
Regular investments made across different market cycles help you to average out the purchase price. This is technically called Rupee cost averaging.
You can watch our video on “How to Turn Rs 10,000 into Rs 1 Crore” to better understand this Investment Strategy in detail.
On the whole, regularly saving through Systematic Investment Plan is a route to accumulate wealth for retail investors. Mutual fund SIP Investments can make your life easy.
You don’t require special knowledge to study the market. You just need to infuse the habit of saving & also increase your savings rate whenever there is income growth. Choose a mutual fund scheme that aligns with your financial goal, risk appetite, and investment horizon to start investing.
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