Building a significant corpus might seem like a distant dream, but what if you could turn ₹5,000 per month into a whopping ₹1crore? The answer lies in the power of compounding and disciplined investing through Systematic Investment Plans (SIPs). This blog shows how a small SIP of ₹5000 can grow into a massive fortune of more than ₹1 crore over time. Check how you can also build a hefty corpus of ₹1 Crore with ₹5000 monthly SIP.
Furthermore, SIPs allow you to invest a fixed amount at regular intervals, typically monthly. This fosters discipline and helps you average out the cost of your investments over time.
Firstly, let’s explore the power of compounding. Additionally, we will discuss the factors influencing your returns. Finally, we will cover the key steps to embark on your journey to becoming a crorepati!
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Quick Tip: You can start your SIP with just ₹1000 and save up to ₹46,800 in tax under section 80C. |
SIP Investment Strategy to Become Crorepati
Moreover, SIPs can also help reduce the impact of market volatility on your portfolio. Additionally, they provide the benefit of rupee-cost averaging, which means you buy more units when prices are low and fewer units when prices are high. Consequently, this strategy can potentially lead to higher returns in the long run as ₹1 Crore with ₹5000 monthly SIP help you avoid the temptation of market timing and ensure you continuously invest regardless of market fluctuations.
You can use a SIP calculator to estimate your potential returns from a Systematic Investment Plan (SIP) by factoring in compound interest. Just enter the investment amount, tenure, and expected return rate, and the calculator estimates the future value of your SIP.
The table below showcases the potential growth of a ₹5,000 monthly SIP over various investment periods, assuming a 12% annual return rate:
| Monthly Investment | Investment Period (Years) | Annual Return Rate (%) | Total Invested | Total Value (Approx) |
| ₹5,000 | 1 | 12% | ₹60,000 | ₹67,200 |
| ₹5,000 | 5 | 12% | ₹3,00,000 | ₹5,28,703 |
| ₹5,000 | 10 | 12% | ₹6,00,000 | ₹18,63,509 |
| ₹5,000 | 15 | 12% | ₹9,00,000 | ₹49,26,209 |
| ₹5,000 | 20 | 12% | ₹12,00,000 | ₹1,15,75,552 (Crorepati) |
| ₹5,000 | 25 | 12% | ₹15,00,000 | ₹2,55,00,097 |
| ₹5,000 | 30 | 12% | ₹18,00,000 | ₹53,927,860 |
Note: The results are estimates; however, they don’t guarantee future performance. Therefore, consulting a financial advisor is recommended for personalized investment advice. The calculations in the above table is not an investment advice.
From the above table, we understand that a ₹5,000 monthly SIP could potentially turn you into a crorepati in around 20 years (assuming a 12% return rate).
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Points To Consider Before Choosing SIP Investment
While the table showcases impressive growth potential, it’s crucial to understand some key points:
- Expected Return Rate: The 12% annual return rate is an assumption based on historical equity market performance. However, actual returns may vary depending on the chosen mutual fund scheme and market conditions.
- The Impact of Inflation: Inflation reduces the purchasing power of your money over time. While your investment grows, keep in mind its future value is relative to inflation.
- Taxes and Fees: SIP investments are subject to capital gains, and tax and exit loads (fees charged by mutual funds when exiting a scheme).
- Discipline is Key: SIPs require consistent investment throughout the chosen tenure. Market fluctuations may tempt you to pause or withdraw, but staying invested is crucial for reaping the benefits of compounding.
- Risk Tolerance: Equity markets offer high growth potential, but also carry inherent risks. Assess your risk tolerance and choose SIPs
Also Read: FD vs Mahila Samman Savings Certificate Which One Is The Best Option?
To Wrap Up!
Moreover, SIPs offer a powerful and achievable path towards financial independence. Remember, this is a simplified example, and consulting a financial advisor is crucial for personalized guidance. However, the potential for wealth creation through SIPs is undeniable. So, start your SIP journey today and watch your money grow exponentially over the long term.
Are you ready to SIP your way to Crorepati status?
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Frequently Asked Questions
Q. How much will I get if I invest ₹5,000 in SIP?
A.The answer depends on several factors. First of all, including the investment tenure (how long you invest), the annual return rate (which can vary based on the chosen mutual fund scheme), and compounding. Additionally, you can use a SIP calculator to estimate the potential maturity value.
Q. How much to invest in SIP to get ₹1 crore?
A. There’s no fixed amount as returns can fluctuate. But let’s do some rough math (assuming a 12% return rate). To reach ₹1 crore in 20 years through SIP, you might need to invest around ₹5000 per month. However, remember, this is a simplified calculation, and consulting a financial advisor is recommended for personalized planning.
Q. Is ₹5,000 per month SIP good?
A. A ₹5,000 SIP can be a good starting point, especially for long-term goals. It fosters discipline and benefits from compounding. However, it depends on your financial goals and risk tolerance. Consider a financial advisor’s guidance for a personalized assessment.
Q. Which SIP gives a 40% return?
A. It’s highly unlikely to find a SIP scheme consistently offering a 40% return rate. However, such high returns are usually associated with high risk. Therefore, focus on a balanced approach considering your risk profile and investment goals.
Q. What is better PPF or SIP?
A. Both PPF (Public Provident Fund) and SIPs are investment options, each with its pros and cons. PPF offers guaranteed returns and tax benefits, but lower potential growth compared to SIPs in equity markets. SIPs offer higher growth potential but come with market risks. Consider your risk tolerance and financial goals when choosing.
Q. Which SIP has the highest return?
A. Additionally, past performance isn’t a guarantee of future results. Moreover, chasing the “highest return” SIP can be risky. Therefore, focus on a diversified portfolio of SIPs aligned with your risk profile and investment goals.
Q. Can I withdraw SIP anytime?
A. SIP withdrawal options vary depending on the chosen mutual fund scheme. Some schemes may have exit loads (fees) for early withdrawals. It’s generally recommended for long-term investing to benefit from compounding.
